[Federal Register Volume 85, Number 221 (Monday, November 16, 2020)]
[Rules and Regulations]
[Pages 72934-72956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25170]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2510
RIN 1210-AB94
Registration Requirements for Pooled Plan Providers
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Final rule.
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[[Page 72935]]
SUMMARY: This final regulation establishes the requirements for
registering with the Department of Labor as a ``pooled plan provider''
for ``pooled employer plans'' under the Employee Retirement Income
Security Act of 1974, as amended (ERISA). The Setting Every Community
Up for Retirement Enhancement Act of 2019 (SECURE Act) provides that
newly permitted pooled plan providers can begin offering pooled
employer plans on January 1, 2021, but requires such persons to
register with the Secretary of Labor before beginning operations. This
final regulation also establishes a new form--EBSA Form PR (Pooled Plan
Provider Registration)--as the required filing format for pooled plan
provider registrations. The Form PR must be filed electronically with
the Department of Labor. Filing the Form PR with the Department of
Labor also satisfies the SECURE Act requirement to register with the
Department of the Treasury. This final regulation affects persons
wishing to serve as pooled plan providers, defined contribution pension
benefit plans that are operated as pooled employer plans, employers
participating in such plans, and participants and beneficiaries covered
by such plans.
DATES: This final regulation is effective on November 16, 2020.
ADDRESSES: Form PR and the accompanying instructions are the required
filing format for pooled plan provider registrations and the Form PR
must be filed electronically with the Department of Labor at https://www.efast.dol.gov/.
FOR FURTHER INFORMATION CONTACT: Colleen Brisport Sequeda, Office of
Regulations and Interpretations, Employee Benefits Security
Administration, U.S. Department of Labor, (202) 693-8500 (this is not a
toll-free number), for questions related to pooled plan provider
reporting requirements under Title I of ERISA.
Customer service information: Individuals interested in obtaining
general information from the Department of Labor concerning Title I of
ERISA may call the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or
visit the Department's website (www.dol.gov/agencies/ebsa).
SUPPLEMENTARY INFORMATION:
I. Legal Framework
Under ERISA, an employee benefit plan (whether a pension plan or a
welfare plan) must be sponsored by an employer, by an employee
organization, or by both. Section 3(5) of ERISA defines the term
``employer'' for this purpose as ``any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to
an employee benefit plan, and includes a group or association of
employers acting for an employer in such capacity.'' These definitional
provisions of ERISA have been interpreted as permitting a multiple
employer plan (MEP) to be established or maintained by a bona fide
group or association of employers that is controlled by the employer
members and that acts in the interests of its employer members to
provide benefits to their employees.\1\ This approach is based on the
premise that the person or group that maintains the plan is tied to the
employers and employees that participate in the plan by some common
economic or representational interest or genuine organizational
relationship unrelated to the provision of benefits. The Department of
Labor (Department) has taken steps, through a final rule on
``association retirement plans'' at 29 CFR 2510.3-55, to clarify and
expand the types of arrangements that can be treated as multiple
employer plans under Title I of ERISA. That final rule did not,
however, extend to so-called ``open MEPs.'' \2\
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\1\ The SECURE Act did not change the conditions for plans that
were already permitted under section 3(2) of ERISA to act as a
single MEP. See, e.g., Advisory Opinions 2008-07A, 2003-17A, and
2001-04A. Those classes of multiple employer plans (e.g., employer
association retirement plans and plans sponsored by professional
employer organizations) are outside of the scope of this rulemaking,
as are multiple employer plans established and maintained pursuant
to bona fide collective bargaining.
\2\ See the preamble discussion in the Final Rule on the
Definition of ``Employer'' Under Section 3(5) of ERISA--Association
Retirement Plans and Other Multiple-Employer Plans, 84 FR 37508
(July 31, 2019). The Department did, however, seek comments through
a Request for Information published with that proposed rule seeking
comments on whether, and if so under what conditions, open MEP
structures should be treated as a multiple employer plan for
purposes of Title I of ERISA.
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The Setting Every Community Up for Retirement Enhancement Act of
2019 (SECURE Act) \3\ removed possible legal barriers to the broader
use of multiple employer plans by authorizing a new type of ERISA-
covered defined contribution plan--a ``pooled employer plan'' operated
by a ``pooled plan provider.'' The SECURE Act amended section 3(2) of
ERISA to authorize these pooled employer plans, which offer benefits to
the employees of multiple unrelated employers without the need for any
commonality among the participating employers or other genuine
organizational relationship unrelated to participation in the plan,
thus enabling a type of open MEP. A pooled employer plan arrangement
allows most of the administrative and fiduciary responsibilities of
sponsoring a retirement plan to be transferred to a pooled plan
provider. Therefore, a pooled employer plan can offer employers,
especially small employers, a workplace retirement savings option with
reduced burdens and costs compared to sponsoring their own separate
retirement plan. New section 3(44) of ERISA establishes requirements
for pooled plan providers, including a requirement to register with the
Department and the Department of the Treasury (Treasury Department)
before beginning operations as a pooled plan provider. The effective
date for these provisions allows ``pooled employer plans'' to begin
operating on January 1, 2021.
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\3\ The SECURE Act was enacted as Division O of the Further
Consolidated Appropriations Act, 2020 (Pub. L. 116-94) (December 20,
2019).
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Under section 3(2) of ERISA, a pooled employer plan is treated for
purposes of ERISA as a single plan that is a multiple employer plan. A
pooled employer plan is generally defined in section 3(43) as a
qualified retirement plan that is an individual account plan or a plan
that consists of individual retirement accounts described in Internal
Revenue Code (Code) section 408 that is established or maintained for
the purpose of providing benefits to the employees of two or more
employers, the terms of which meet certain requirements set forth in
the statute.\4\ Specifically, the terms of the plan must:
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\4\ 29 U.S.C. 1002(43)(B). The term ``pooled employer plan''
does not include a multiemployer plan or plan maintained by
employers that have a common interest other than having adopted the
plan. The term also does not include a plan established before the
date the SECURE Act was enacted unless the plan administrator elects
to have the plan treated as a pooled employer plan and the plan
meets the ERISA requirements applicable to a pooled employer plan
established on or after such date.
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Designate a pooled plan provider and provide that the
pooled plan provider is a named fiduciary of the plan;
designate one or more trustees (other than an employer in
the plan) to be responsible for collecting contributions to, and
holding the assets of, the plan, and require the trustees to implement
written contribution collection procedures that are reasonable,
diligent, and systematic;
provide that each employer in the plan retains fiduciary
responsibility for the selection and monitoring, in accordance with
ERISA fiduciary requirements, of the person designated as the pooled
plan provider and any other person who is designated as a named
fiduciary of the plan, and the investment and management of the portion
of the plan's assets attributable
[[Page 72936]]
to the employees of that employer (or beneficiaries of such employees)
in the plan to the extent not delegated to another fiduciary by the
pooled plan provider and subject to the ERISA rules relating to self-
directed investments;
provide that employers in the plan, and participants and
beneficiaries, are not subject to unreasonable restrictions, fees, or
penalties with regard to ceasing participation, receipt of
distributions, or otherwise transferring assets of the plan in
accordance with applicable rules for plan mergers and transfers;
require the pooled plan provider to provide to employers
in the plan any disclosures or other information that the Secretary of
Labor may require, including any disclosures or other information to
facilitate the selection or monitoring of the pooled plan provider by
employers in the plan;
require each employer in the plan to take any actions that
the Secretary of Labor or pooled plan provider determines are necessary
to administer the plan or to allow for the plan to meet the ERISA and
Code requirements applicable to the plan, including providing any
disclosures or other information that the Secretary of Labor may
require or which the pooled plan provider otherwise determines are
necessary to administer the plan or to allow the plan to meet such
ERISA and Code requirements; and
provide that any disclosure or other information required
to be provided to participating employers may be provided in electronic
form and will be designed to ensure only reasonable costs are imposed
on pooled plan providers and employers in the plan.
The fidelity bonding requirements in ERISA section 412 apply to
fiduciaries and other persons handling the assets of a pooled employer
plan, but the maximum bond amount for each such plan official is
$1,000,000, as compared to the $500,000 maximum that applies in the
case of other ERISA-covered plans that do not hold employer
securities.\5\
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\5\ The SECURE Act requires that pooled plan providers must
ensure that all plan fiduciaries and other persons who handle plan
assets are bonded in accordance with section 412 of ERISA. In the
Department's view, the SECURE Act confirms the application of ERISA
section 412 requirements to pooled employer plans, except that the
Act establishes $1,000,000 as the maximum bond amount as compared to
$500,000 for plans that do not hold employer securities. Thus, the
normal section 412 rules for ERISA plans govern the bonding
requirements for pooled employer plans and the pooled plan provider
is subject to the provisions of ERISA section 412(b), which provides
that ``it shall be unlawful for any plan official of such plan or
any other person having authority to direct the performance of such
functions, to permit such functions, or any of them, to be performed
by any plan official, with respect to whom the requirements of
subsection (a) [of ERISA section 412] have not been met.'' See 29
CFR 2550.412-1, 29 CFR part 2580; see also Field Assistance Bulletin
2008-04 (providing a general description of statutory and regulatory
requirements for bonding). The Department does not read the SECURE
Act as broadening the section 412 bonding rules to apply to persons
who handle plan assets regardless of whether they handled plan funds
or other property within the meaning of section 412. Similarly, the
existing statutory and regulatory exemptions for certain banks,
insurance companies, and registered broker-dealers continue to
apply.
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A pooled plan provider with respect to a pooled employer plan is
defined in ERISA section 3(44) to mean a person that--
is designated by the terms of the plan as a named
fiduciary under ERISA, as the plan administrator, and as the person
responsible to perform all administrative duties (including conducting
proper testing with respect to the plan and the employees of each
employer in the plan) that are reasonably necessary to ensure that the
plan meets the Code requirements for tax-favored treatment and the
requirements of ERISA and to ensure that each employer in the plan
takes such actions as the Secretary or the pooled plan provider
determines necessary for the plan to meet Code and ERISA requirements,
including providing to the pooled plan provider any disclosures or
other information that the Secretary may require or that the pooled
plan provider otherwise determines are necessary to administer the plan
or to allow the plan to meet Code and ERISA requirements;
acknowledges in writing its status as a named fiduciary
under ERISA and as the plan administrator;
is responsible for ensuring that all persons who handle
plan assets or are plan fiduciaries are bonded in accordance with ERISA
requirements; and
registers as a pooled plan provider.
The SECURE Act specifies that the Secretary may perform audits,
examinations, and investigations of pooled plan providers as may be
necessary to enforce and carry out the purposes of the provision. The
SECURE Act also directs the Department to issue such guidance as it
determines appropriate to carry out the pooled employer plan and pooled
plan provider provisions, including guidance (1) to identify the
administrative duties and other actions required to be performed by a
pooled plan provider; and (2) that provides, in appropriate cases
involving a noncompliant employer, for transfer of plan assets
attributable to employees of the noncompliant employer (or
beneficiaries of such employees) to (a) a plan maintained only by that
employer (or its successor), (b) a tax-favored retirement plan for each
individual whose account is transferred, or (c) any other arrangement
that the Department determines is appropriate. The SECURE Act further
provides such guidance must provide for the noncompliant employer (and
not the plan with respect to which the failure occurred or any other
employer in the plan) to be liable for any plan liabilities
attributable to employees of the noncompliant employer (or
beneficiaries of such employees), except to the extent provided in the
guidance. An employer or pooled plan provider is not treated as failing
to meet a requirement of guidance issued by the Secretary if, before
the issuance of such guidance, the employer or pooled plan provider
complies in good faith with a reasonable interpretation of the
provisions to which the guidance relates.
The SECURE Act also provides that the Form 5500 annual return/
report of employee benefit plan (Form 5500) filing for a multiple
employer plan subject to section 210 of ERISA, including a pooled
employer plan, must include a list of the employers in the plan, a good
faith estimate of the percentage of total contributions made by such
employers during the plan year, the aggregate account balances
attributable to each employer in the plan (determined as the sum of the
account balances of the employees of each employer and the
beneficiaries of such employees) and, with respect to a pooled employer
plan in particular, the identifying information for the person
designated under the terms of the plan as the pooled plan provider. In
addition, the provision authorizes the Department to prescribe
simplified reporting for pooled employer plans that cover fewer than
1,000 participants, but only if no single employer in the plan has 100
or more participants covered by the plan.
The SECURE Act does not limit the class of persons who can act as
pooled plan providers, but it is expected that many financial services
companies (such as insurance companies, banks, trust companies,
consulting firms, record keepers, and third-party administrators) will
be pooled plan providers. As noted above, however, section 3(44) does
require as a condition of being a pooled plan provider that the person
``registers as a pooled plan provider with the Secretary, and provides
to the Secretary such other information the Department may require,
before beginning operations as a pooled plan provider.'' \6\
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\6\ ERISA section 3(44)(a)(ii).
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[[Page 72937]]
In the Department's view, the primary statutory purpose of the
registration requirement is to provide the Department with sufficient
information about persons acting as pooled plan providers to engage in
effective monitoring and oversight of this new type of ERISA-covered
retirement plan. Although the Department does not have specific details
as to how pooled employer plans authorized under the SECURE Act will be
structured or operated, the Department has assumed that they may be
similar to other currently operating multiple employer plans, and the
Department did not receive any comments suggesting a contrary view.
Additionally, there may be challenges associated with these new types
of multiple employer plans that the Department, the Treasury
Department, or the Internal Revenue Service (IRS), as the Federal
agencies charged with oversight of private-sector pension plans, may
need to address. The SECURE Act expressly provides that participating
employers will retain certain residual fiduciary responsibilities,
including responsibilities with respect to the selection and oversight
of the pooled plan provider and the plan's other named fiduciaries.
This raises concerns that there may be greater potential for inadequate
employer oversight of the activities of a pooled employer plan, its
fiduciaries, and service providers than is true of more traditional
employer-sponsored plans because participating employers pass along
more responsibility to the pooled plan provider than they do in other
plan arrangements.
The registration process and requirements must enable the
Department to identify pooled plan providers when they begin operating
and to effectively oversee the providers and plans. While pooled plan
providers will be required to file Forms 5500 for the pooled employer
plans they operate, Forms 5500 generally are not filed until seven to
nine-and-a-half months after the end of the plan year.\7\ In the
absence of appropriate detail in the registration statement, a pooled
plan provider could begin operating multiple plans with hundreds or
thousands of participants and millions of dollars without the agencies
having any information about the pooled employer plans for almost two
years.
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\7\ Title I and Title IV of ERISA and the Code establish annual
reporting requirements for employee benefit plans. DOL, the Treasury
Department (specifically the IRS), and the Pension Benefit Guaranty
Corporation jointly developed the Form 5500 so employee benefit
plans could use one form to satisfy annual reporting requirements
under ERISA and the Code. The Form 5500 is part of ERISA's overall
reporting and disclosure framework, helping to assure that employee
benefit plans are operated and managed in accordance with certain
prescribed standards and that participants and beneficiaries, as
well as regulators, are provided or have access to sufficient
information to protect the rights and benefits of plan participants
and beneficiaries.
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In determining how best to implement the statutory registration
requirement, the Department considered a number of alternatives
including whether the statement must be filed when the provider begins
operations in anticipation of offering one or more pooled employer
plans, when it begins operating each individual pooled employer plan,
or both. The Department also does not believe that the SECURE Act
provisions preclude the Department from imposing reasonable ongoing
reporting requirements to enable the Department to effectively oversee
pooled plan providers and the pooled employer plans they operate.
Therefore, as discussed in more detail below, relying on the language
in the SECURE Act requiring a registration statement, as well as on its
broad authority under section 505 of ERISA to prescribe regulations,\8\
including forms, to enable the Department to carry out its statutory
oversight mission, the Department has chosen the structure set out in
the final rule, which adopts the structure essentially as proposed.
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\8\ Section 505 of ERISA provides generally that the Secretary
may prescribe such regulations the Secretary ``finds necessary or
appropriate to carry out the provisions of this subchapter. Among
other things, such regulations may define accounting, technical and
trade terms used in such provisions; may prescribe forms; and may
provide for the keeping of books and records, and for the inspection
of such books and records (subject to section 1134(a) and (b) of
this title).'' 29 U.S.C. 1135.
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The final rule requires an initial registration filing and
supplemental filings. The supplemental filings are to report changes in
the information in the initial filing, information about each specific
pooled employer plan before initiation of operations, and information
on specified reportable events. These filings (initial and
supplemental) capture information that is important for the Department,
the Treasury Department, and the IRS to carry out oversight and for
participating employers to exercise their fiduciary duties of selection
and monitoring. The final rule also requires a final filing once the
last pooled employer plan offered by a pooled plan provider has been
terminated and has ceased operations.
The Department believes that the initial registration, supplemental
filing, and final filing requirements, when combined with the Form 5500
annual reporting requirements, will give the Department the timely
access to pooled plan provider information needed to fulfill the
monitoring and oversight tasks the SECURE Act placed on the agencies
and will be less burdensome and less costly for pooled plan providers
and pooled employer plans than some of the alternatives considered. The
final rule establishes a new EBSA form--EBSA Form PR (Pooled Plan
Provider Registration) (Form PR)--as the required filing format for
pooled plan provider registrations. Filing the Form PR satisfies the
requirements under Title I of ERISA and the Code to register with the
Department and the Treasury Department, respectively.
This final rule is a deregulatory action under Executive Order
(E.O.) 13771. Details on the estimated costs of this final rule can be
found in the regulatory impact analysis, set forth later in this
preamble. Pursuant to the Congressional Review Act (5 U.S.C. 801 et
seq.), the Office of Information and Regulatory Affairs designated this
rule as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
On September 1, 2020, the Department published in the Federal
Register a proposed rule and proposed EBSA Form PR. The Department
invited interested persons to submit comments on these items and, in
response to this invitation, the Department received 20 written
comments from a variety of parties, including plan sponsors and
fiduciaries, plan service and investment providers, and employee
benefit plan and participant representatives. These comments are
available for review on the ``Public Comments'' page of the
Department's Employee Benefits Security Administration website under
the ``Laws and Regulations'' tab. Below is a detailed discussion of the
provisions of the final rule, the public comments the Department
received, and how these comments affected the Department's decision-
making when adopting the final rule.
II. Registration Requirements for Pooled Plan Providers
The SECURE Act expressly requires, as a condition of being a pooled
plan provider, that the provider register with the Department and
provide other information that the Secretary may require. The SECURE
Act, however, did not include specific content requirements for pooled
plan provider registration. Under the final rule, the requirement to
register and provide information to the Department is triggered by
specific events. The rule's requirements can be divided into three sets
of filing obligations corresponding
[[Page 72938]]
to the timing of specific events. First, there is an initial
registration filing of basic identifying information about the pooled
plan provider and additional information about pending legal or
administrative proceedings. Second, there is a supplemental filing or
filings requirement. A supplemental filing is required if there is a
change in the information that was reported in the initial registration
or if there is a significant new financial and/or operational event
related to the pooled plan provider. A supplemental filing also is
required when a pooled employer plan starts operations. The requirement
for supplemental information is intended to provide the agencies,
participating employers and employees, and the public information about
noteworthy events occurring after the initial registration. Third,
there is a final filing that is required once the last pooled employer
plan has been terminated and ceased operations.
A. Initial Registration
Beginning Operations as a Pooled Plan Provider
Paragraph (a) of the final regulations states that section 3(44) of
ERISA sets forth the criteria that a person must meet in order to be a
pooled plan provider for pooled employer plans under section 3(43) of
ERISA. This introductory paragraph provides the context and scope for
the registration requirement established in the remainder of the final
rule. Commenters did not raise questions or concerns with paragraph (a)
in the proposed rule. Therefore, the final rule adopts this provision
as proposed.
Section 3(44)(A)(ii) of ERISA contains the registration
requirement. That section, in relevant part, defines a pooled plan
provider as a person who ``registers as a pooled plan provider with the
Secretary, and provides to the Secretary such other information as the
Secretary may require, before beginning operations as a pooled plan
provider.'' The statute does not define what is meant by ``beginning
operations as a pooled plan provider.''
Paragraph (b) of the proposed rule defined the central phrase
``beginning operations as a pooled plan provider'' to mean ``publicly
marketing services as a pooled plan provider or publicly offering a
pooled employer plan.'' The preamble to the proposal clarified that
this definition was not intended to require registration as a result of
preliminary business activities, such as establishing the business
organization, creating a business plan, obtaining necessary licenses or
entering into contracts with subcontractors or partners, obtaining a
Federal employer identification number from the IRS, or actions and
communications designed to evaluate market demand in advance of
publicly marketing pooled plan provider services or publicly offering
one or more pooled employer plans.
The proposed rule specifically solicited comments on this crucial
definition in paragraph (b) by asking the following questions: Is the
definition of ``beginning operations as a pooled plan provider,'' which
determines whether initial registration is required, appropriate in
scope? Should the definition exclude marketing and solicitation efforts
so that the initial registration is tied solely to beginning operation
of a pooled employer plan? Should the deadlines for filing an initial
registration be nearer to the date of actual public marketing
activities if the pooled plan provider intends only to engage in
marketing and solicitation efforts, and will not enroll any employer or
employee in a pooled employer plan until at least 30 days after initial
registration?
A number of commenters raised significant concerns with this
proposed definition, particularly with its reliance on ``publicly
marketing services as a pooled plan provider'' or ``publicly offering a
pooled employer plan'' as the alternative acts that would decisively
establish precisely when a person is considered to have begun
``operations'' as a pooled plan provider. A more global objection was
that registration should not turn on such early-stage and inchoate
activities of firms with potential interest in eventually serving as a
pooled plan provider. A more specific concern was based on the
assertions that the two selected activities--marketing and offering--
were too vague.
The consensus of these commenters was that more precision and
clarity is needed when dealing with the establishment of a regulatory
trigger for a governmental filing requirement, especially the ``public
marketing'' trigger. These commenters uniformly agreed that firms need
to evaluate market demand before deciding whether to offer a pooled
employer plan, and that there is no clear distinction between commonly
accepted methods for evaluating demand and the act of ``publicly
marketing services'' within the plain meaning of these words in the
proposal.
A number of commenters stated that the line between
``communications designed to evaluate market demand,'' which the
Department explained in the preamble of the proposal would not be
actions that would trigger the proposal's filing requirement, and
``publicly marketing services as a pooled plan provider'' is not clear.
Neither of these terms, according to these commenters, is clearly
defined in the proposed rule or its preamble, and there is no safe
harbor communication design or disclaimer described that could be used
to ensure that a communication provided by a pooled plan provider to
evaluate market demand does not also constitute public marketing
material.
To illustrate this ambiguity, commenters offered the following
examples. An announcement at an industry conference of a firm's intent
to enter the marketplace as a pooled plan provider, for example, could
be construed as public marketing by some but not by others. In
addition, a commenter suggested that a firm making references to
developing pooled plan provider services or to establishing a pooled
employer plan in personal biographies, company websites, or company
handouts could be construed as public marketing by some but not by
others. Similarly, communications to current clients about future
intentions to offer a pooled employer plan could be construed as public
marketing. Call center responses by employees, with or without
marketing responsibilities in their job descriptions, could be
construed as public marketing by some but not by others. In citing
these examples, commenters stated that public marketing and
communication is a necessary predicate for firms to gauge demand and
decide whether it makes financial sense to offer or bring to market a
particular product or service, and pooled employer plans are no
different. Firms need to solicit interest publicly before determining
whether to enter the marketplace, according to these commenters, and
the proposal does not recognize that reality.
Several commenters predicted certain potential negative effects of
this proposed definition. One possible effect of the ambiguity of the
proposal, according to comments, is that potential pooled plan
providers would register before they have fully considered and designed
a product or approach to bring to market. Another possible effect,
according to comments, is that potential providers would avoid entering
the marketplace altogether. A third possible effect of this ambiguity
relates to firms that have already begun research and marketing efforts
in anticipation of pooled employer plan business operations to commence
on January 1, 2021. These firms, according to one commenter, will be in
immediate violation of the registration requirement
[[Page 72939]]
upon the effective date of the final rule because research and
marketing activity will have preceded registration, even if these firms
register on the first possible date following publication.
For these reasons, the commenters overwhelmingly favor a final rule
that defines ``beginning operations as a pooled plan provider'' in a
manner that ties the initial registration to some core operational
facet of the pooled employer plan, rather than to the type of early-
stage marketing and soliciting activities in the proposal. Some
commenters suggested that registration could be required in advance
(e.g., 30 days) of a specific and objectively determinable act
customarily associated with the start of a retirement plan. Commenters
offered the following examples: The date of plan establishment; the
date of enrollment of the first participating employer and its
employees; the first date of actual plan operation; the date of the
first participating employer's formal adoption of a participation or
similar agreement; the date of the pooled plan provider's first
appointment as such by an adopting employer under a pooled employer
plan; and the date when the first dollar is obligated to be held in
trust.
Alternatively, other commenters suggested a less objective
approach. In particular, they suggested tying the registration to
whenever the pooled employer plan is considered covered under ERISA,
e.g., 30 days in advance of that point. This suggestion is based on a
different provision in the proposal, at paragraphs (b)(2) and (b)(6)
(relating to a supplemental report containing the name and EIN for the
pooled employer plan, and the name, address, and EIN for the trustee of
the plan), which relies on the same longstanding facts-and-
circumstances coverage principles that have governed plans under ERISA
for decades. In an attempt to bring some certainty to this highly
facts-and-circumstances-dependent approach, one commenter suggested
that the final rule could clarify, perhaps by example, that this
standard would be considered satisfied if registration occurred at some
designated period (e.g., 30 days) before ``the date the first pooled
employer plan offered by the pooled plan provider is positioned to
enter into participation arrangements with employers.''
Regardless of the approach taken to define this concept, these
commenters uniformly agreed that there is no need to prevent providers
from marketing to potential employer members during the period between
registration and plan operations. Any such prohibition would be
counterproductive or even harmful to potential participating employers,
according to these commenters. Providers must be able to market their
pooled employer plan and pooled plan provider services as early as
practicable so that prospective participating employers can assess
their options, according to these commenters.
In response to these commenters, paragraph (b) of the final rule
adopts operation of a pooled employer plan as the event requiring prior
registration rather than ``marketing'' or ``offering services'' as a
pooled plan provider. Specifically, paragraph (b) of the final rule
provides that, for purposes of implementing the statutory phrase
``beginning operations as a pooled plan provider,'' the final rule
defines that phrase to mean when the pooled plan provider begins
``initiation of operations of the first plan that the person operates
as a pooled employer plan.'' This term must be read in conjunction with
paragraph (b)(6) of the final rule, which states, in response to the
many commenters looking for a brighter-line test, that a pooled
employer plan is treated as initiating operations as a pooled employer
plan when the first participating employer executes or adopts a
participation, subscription, or similar agreement for the plan
specifying that it is a pooled employer plan or, if earlier, when the
trustee of the plan first holds any asset in trust. A benefit of this
approach is that it encompasses the traditional activities of pension
plan formation and is intended to provide would-be pooled plan
providers with maximum flexibility.
The Department agrees with the commenters that this approach will
simplify the registration process. Preliminary business activities of a
would-be pooled plan provider, such as establishing the business
organization, creating a business plan, obtaining necessary licenses,
entering into contracts with subcontractors or partners, obtaining a
Federal employer identification number from the IRS, or actions and
communications designed to evaluate market demand, including marketing
activity, do not trigger the registration requirement. This approach
also continues to advance and support the Department's oversight
functions, as the proposal sought to do. From the outset, an important
purpose of the registration requirement is to provide the Department,
the Treasury Department, the IRS, and importantly, prospective employer
customers and the public, with notice and relevant information about
the pooled plan provider. The Department has determined that this
purpose is served equally as well by the final rule's focus on plan
operations, as compared to the proposal's focus on marketing and
offering of services.
Timing of Initial Registration--Changes to the Proposal's 90/30 Rule
Paragraph (b)(1) of the proposal established a registration window
by providing, in relevant part, that a person intending to act as a
pooled plan provider must file the Form PR with the Department ``[n]o
earlier than 90 days and no later than 30 days before beginning
operations as a pooled plan provider[.]'' Many commenters questioned
the necessity of the complex aspects of the proposal, including this
provision. One commenter, in particular, stated that it is not clear
what value this narrow time period (60 days) would provide to the
Department in its oversight role. This commenter instead suggested
expanding the 90-day period to 180 days before beginning operations. A
longer window, according to this commenter, would give providers more
leeway in getting a plan up and running after registration, as there
could be unforeseen circumstances that delay the official establishment
date of a plan.
The Department agrees with the commenters that this aspect of the
proposal could be streamlined without compromising important
safeguards. The principal purpose of the 90-day restriction in the
proposal was to ensure the information filed with the Department is
relatively accurate and current so that Federal oversight agencies and
employers are able to effectively discharge their oversight and
monitoring obligations. Consistent with the arguments of these
commenters, the Department has concluded this purpose is adequately
supported by the final rule's requirement, in paragraph (b)(3)(i) of
the final rule, that a pooled plan provider submit a timely
supplemental filing when there is a change in the information that was
reported in an initial filing. Accordingly, paragraph (b)(1) of final
rule is changed from the proposal and does not include the ``no earlier
than 90 days'' clause, but instead requires the filing of an initial
registration ``at least 30 days before the initiation of operations of
a plan as a pooled employer plan.''
Special Transition Provision--Delayed Application of the 30-Day Rule
Paragraph (b)(1) of the final rule requires an initial registration
at least 30 days before the initiation of operations of a plan as a
pooled employer plan. Some commenters on the proposal stated that a
significant number of firms already have committed substantial
resources toward, and intend to initiate, operations of pooled employer
plans on
[[Page 72940]]
January 1, 2021, or as soon as possible thereafter. These commenters
are concerned that they will be compelled to delay the initiation of
operations of pooled employer plans solely because of the Department's
timeline for publishing a final rule. To address these concerns,
paragraph (c) of the final rule contains a special provision that
allows an initial registration to be filed anytime before February 1,
2021, provided that it is filed ``on or before'' the initiation of
operations of a plan as a pooled employer plan. The effect of this
provision is to waive the otherwise applicable 30-day waiting period
between registration and the start of plan operations. The provision
applies with respect to pooled plan providers that would initiate
operations of a plan as a pooled employer plan on or after January 1,
2021 and before February 1, 2021. Paragraph (c) of the final rule has
no effect after that date. Some commenters requested a much longer
period, e.g., a period of 180 days following publication of a final
rule. Requests of this magnitude, however, appear to have been
predicated, at least in part, on the proposal's reliance on ``publicly
marketing services'' as the trigger for the registration requirement,
which has been eliminated.
Content Requirements
The SECURE Act left it to the agencies' discretion to establish
specific content requirements for the pooled plan provider
registration. In developing this proposal, the Department focused on
information needed by the agencies to identify, contact, and engage in
timely oversight of pooled plan providers, as well as on the
information that the Department could post on its website that would
provide employers considering participating in a pooled employer plan,
participating employees, covered employees, and other interested
stakeholders the ability to identify, contact, and perform some due
diligence on pooled plan providers. The Department also considered the
content requirements of other registration requirements under Federal
and State securities laws for investment advisers and broker-dealers.
For example, among other information, registrations require disclosures
of identifying and contact information, background information about
the registrant's business, information about relevant management
policies, names of executives and general partners, relevant legal
proceedings and previous violations, and relevant negative information,
such as legal problems or other business events or trouble that would
be of consequence to users of the registration information. The
Department also focused on minimizing the administrative burden and
expense involved for pooled plan providers and the pooled employer
plans they operate.
Based on those considerations, and as a result of applicable
comments more fully described below, paragraph (b)(1) sets out the
specific information a prospective pooled plan provider would need to
file on Form PR at least 30 days before beginning operations as a
pooled plan provider:
1. Legal Business Name and any Trade Name (Doing Business As).
Commenters did not raise questions or concerns with this requirement;
therefore, the final rule adopts this provision as proposed.
2. Federal Employer Identification Number (EIN). An EIN is a nine-
digit employer identification number (for example, 00-1234567) that has
been assigned by the IRS. Entities that do not have an EIN may apply
for one on Form SS-4, Application for Employer Identification Number.
The Form SS-4 is available by calling 1-800-829-4933 or on the IRS
website at https://www.irs.gov/pub/irs-pdf/fss4.pdf. EIN data is
important for accurately identifying registrants and cross-referencing
information reported about the registrant on other filings, such as the
Form 5500 filed by the pooled employer plans operated by the
registrant. Commenters did not raise questions or concerns with this
requirement. Therefore, the final rule adopts this provision as
proposed.
3. Business Telephone. Paragraph (b)(1)(ii) of the final rule
requires a business telephone number as a way for interested/
participating employers and covered employees to contact the pooled
plan provider for information. Some commenters, responding to questions
in the preamble of the proposal, requested confirmation that this final
regulation does not preclude a pooled plan provider from permitting a
call center number to be reported as the business phone. The view of
these commenters is that registrants should be able to determine the
most appropriate contact information to provide on the registration.
Other commenters suggested a better business practice for pooled
employer plans may be to have one telephone number for potential
participating employers and a different telephone for participating
employers and participants, as the nature of the callers' questions and
needs could be quite different. This paragraph of the final rule
requires the phone number of the pooled plan provider; it does not
prescribe or proscribe anything beyond that. Registrants decide what
business phone number to include in the registration for this purpose.
Accordingly, the final rule adopts the provision as proposed.
4. Business Mailing Address. Commenters did not request any
revisions to this requirement, which is adopted as proposed.
5. Address of any public website or websites of the pooled plan
provider or any affiliates to be used to market any such person(s) as a
pooled plan provider to the public or to provide public information on
the pooled employer plan operated by the pooled plan provider. The
preamble to the proposed rule explained that the Department considers
this information useful for its oversight of pooled plan providers and
will also assist employers performing due diligence in selecting and
monitoring pooled employer plans. The preamble also stated that the
Department expects that most pooled plan providers will have such
websites and believes that having information on such websites provides
an alternative to requiring more information to be submitted as part of
the registration process. Commenters did not raise questions or
concerns with or request any revisions to this requirement in the
proposal. Therefore, the final rule adopts this provision as proposed.
6. The name, mailing address, telephone number, and email address
for the responsible compliance official of the pooled plan provider.
Paragraph (b)(1)(v) of the proposal required the reporting of basic
contact information about the pooled plan provider's ``primary
compliance officer.'' The Department is aware that many companies of
the type likely to be pooled plan providers have individuals or teams
of compliance officers with varying responsibilities, and this
provision of the proposal relied on that relatively uncontroversial
fact. The intent behind this provision of the proposal was to capture
and make available basic contact information of the person responsible
for these individuals or compliance officers because, in the
Department's view, it is important that the Department, as well as
participating employers and covered employees, have an effective means
of communicating with a responsible person at the pooled plan provider
regarding compliance questions or concerns.
Some commenters questioned the necessity of providing contact
information for a ``primary compliance officer.'' To the extent the
purpose of the requirement is to provide a contact for the Department's
own use, they argued that the Department as a Federal
[[Page 72941]]
regulatory authority independently has the capacity to identify and
contact a compliance officer without regard to this regulation. To the
extent the requirement is designed to provide employers and employees
with contact information for a person that is able to answer questions
about their pooled employer plan, the commenters believed that the
primary compliance officer would not be helpful. They suggested that
the type of information employers and employees were likely to seek, or
that they should seek, is more appropriately provided by the plan
administrator, and noted that contact information for the plan
administrator could be found in the summary plan description, or
answered by the general business number required by paragraph
(b)(1)(ii) of the proposal. These commenters accordingly suggested
eliminating this aspect of the proposal.
The Department declines to adopt this global suggestion. The
Department continues to believe that employers, participants, and
oversight agencies will have legitimate questions specifically
regarding the pooled employer plans' compliance with applicable
provisions under ERISA and the Code that cannot be answered by
contacting, for example, the general number of the pooled plan
provider, a salesperson, or an entry-level clerk. Pooled plan providers
and pooled employer plans are new types of entities under the law, and
it is reasonable to expect that affected individuals will have genuine
compliance-oriented questions that may not have ready answers.
Moreover, even in its own experience, the Department sometimes
encounters friction when attempting to communicate with responsible
compliance officials, especially at large companies with numerous
touchpoints. The Department, therefore, retains a version of this
requirement in the final rule, but is modifying it to address public
comments.
Some commenters stated that the term ``primary compliance officer''
is imprecise and possibly confusing. According to commenters, some
companies that might be pooled plan providers do not have compliance
officers at all, while other firms have many compliance officers none
of whom are necessarily ``primary.'' For the former group, commenters
stated that presumably the Department is not requiring that a pooled
plan provider hire a primary compliance officer solely for this
registration regulation, and, as regards the latter group, the
commenters stated that the proposal was unclear as to what laws or
regulations the identified person had to be responsible for as primary
compliance officer. Finally, some commenters objected to having to
identify a specific individual by name, as a contact, asserting that
this could raise privacy or similar concerns and necessitate
supplemental filings, as required by paragraph (b)(3)(i) of the
regulation, with every change in compliance officer. In response to
these comments, the Department has made adjustments to the proposal.
Paragraph (b)(1)(v) of this final rule requires the ``[n]ame,
address, contact telephone number and email address for the responsible
compliance official of the pooled plan provider.'' For this purpose,
the term responsible compliance official means ``the person or persons,
identified by name, title, or office, responsible for addressing
questions regarding the pooled plan provider's status under, or
compliance with, applicable provisions of the Employee Retirement
Income Security Act and the Internal Revenue Code as pertaining to a
pooled employer plan.'' As revised, this does not require a pooled plan
provider to hire or promote an individual with any particular degree or
certification. Rather, this standard simply requires an identification
of, and basic contact information for, the person, unit, or element
designated by the pooled plan provider as the point-person responsible
for fielding and addressing questions about the pooled plan provider's
status under ERISA and the Code. Put differently, this provision
requires nothing more than that the company identify with modest
specificity whom it wishes to receive and address status and
compliance-oriented questions under the two laws (ERISA and the Code)
that sanction the existence of this novel type of plan, and how to
contact this person, office, or other element of the pooled plan
provider.
7. The agent for service of legal process for the pooled plan
provider and the address at which process may be served on such agent.
The proposal rule explained that this provision would allow either a
person or a process service company to be identified as the agent for
service of legal process. Commenters did not raise any material
questions or concerns with this requirement, therefore, the final rule
adopts this provision substantially as proposed. However, in response
to observations that the rule implements a registration requirement and
does not otherwise implement substantive mandates, the final rule
removes from the proposal the phrase ``and in addition a statement that
service of legal process may be made upon the pooled plan provider.''
This removal clarifies that paragraph (b)(1)(vi) of the final rule does
not confer or affect rights or obligations of parties.
8. The approximate date when pooled plan operations are expected to
commence. Because the SECURE Act requires that the registration must be
filed ``before the pooled plan provider begins operations,'' this data
element will enable the Department to ensure compliance with the SECURE
Act requirement. Paragraph (b)(1) of the final regulation requires that
the registration be filed at least 30 days before beginning operations
as a pooled plan provider, except where a provider falls within the
initial 30-day transition period. Commenters did not raise questions or
concerns about this provision or request any revisions to its text.
Therefore, the final rule adopts this provision as proposed.
9. A description of the administrative, investment, and fiduciary
services that will be offered or provided in connection with the pooled
employer plans, including a description of the role of any affiliates
in such services. Paragraph (b)(1)(viii) of the proposal requires the
registrant to include in the initial filing a ``description of the
administrative, investment, and fiduciary services that will be offered
or provided in connection with the pooled employer plans, including a
description of the role of any affiliates in such services.'' The
preamble to the proposal explained that information about various plan
services to be provided by the pooled plan provider or any affiliate
will assist the Department and prospective participating employers in
evaluating the pooled plan provider and identifying potential conflicts
of interest with respect to the operations or investments of any pooled
employer plans to be operated by the provider.
Commenters raised multiple concerns with this provision. A few
commenters argued that this provision (in conjunction with other
provisions) is inconsistent with a simple registration requirement and
should be eliminated from the final rule. These commenters argue
broadly that the success of this new retirement vehicle (i.e., the
pooled employer plan) will be jeopardized by excessive and unnecessary
regulations. These commenters generally advocated for fewer regulatory
obstacles to starting up pooled employer plans, but with careful
monitoring and possible adjustments over time.
Other commenters asserted that the Department's expectations for
paragraph (b)(1)(viii) of the proposal are unclear because of tensions
between the text of the regulation, on the one hand, and the proposed
Form PR and related
[[Page 72942]]
instructions, on the other. The commenters noted that the proposed
regulatory text requires a ``description'' of the services that will be
offered or provided by a pooled plan provider or affiliate, as well as
a ``description of the role'' of any affiliates in such services. By
contrast, the proposed Form PR and related instructions require only
that certain boxes be checked to indicate whether certain services will
be offered or provided by the pooled plan provider or an affiliate (no
description at all), according to these commenters. Assuming that the
Department intends that the narrower requirements in the proposed Form
PR (i.e., whether services will be provided, instead of a description
of and the role of affiliates) would satisfy the operative text, the
commenters additionally questioned whether such reporting offers the
Department or employers any value or information not otherwise
available already, such as through existing reporting obligations (Form
5500, Schedule C) and disclosure regulations.
Other commenters argued that the information required by paragraph
(b)(1)(viii) of the proposal is unnecessary. This is because, according
to these commenters, the SECURE Act, among other things, requires the
pooled plan provider to serve as the ERISA 3(16) administrator and as a
named fiduciary. As such, the pooled plan provider is ``the person
responsible for the performance of all administrative duties (including
conducting proper testing with respect to the plan and the employees of
each employer in the plan).'' Accordingly, it should be evident, these
commenters assert, that the pooled plan provider will provide
administrative and fiduciary services. These commenters see no benefit
to this proposed provision that would require the pooled plan provider
to report such obvious information back to the government on the Form
PR.
Other commenters questioned whether this provision would result in
the disclosure of information helpful to carry out the stated
objectives of the Department (to assist in the evaluation of potential
for conflicts of interest). These commenters stated their belief that
many pooled plan providers will offer or sponsor multiple pooled
employer plans. Further, these commenters stated that many pooled plan
providers will offer multiple services, directly or through affiliates,
to these plans. These commenters stated their belief that some pooled
employer plans will use some services offered by the pooled plan
provider (or affiliates), and other pooled employer plans will use a
different combination of services offered by the pooled plan provider
(or affiliates). In recognition that each pooled employer plan
ultimately will select its own combination of services from the pooled
plan provider (or affiliates), these commenters question whether the
generic list of information required by paragraph (b)(1)(iii) of the
proposal (as implemented through the proposed Form PR), which is not
specific to any particular pooled employer plan, would meaningfully
advance the stated objectives of the Department. These commenters
suggested that potential participating employers need different
information-information specific to their particular pooled employer
plan-to evaluate potential conflicts, such as information more closely
approximating the information covered service providers furnish to
responsible plan fiduciaries under 29 CFR 2550.408b-2.
The Department declines to eliminate this provision. The SECURE Act
clearly imposes an oversight duty on the Department with respect to
pooled employer plans. A chief concern of the Department is potential
conflicts of interest. Pooled plan providers are in a unique statutory
position in that they are granted full discretion and authority to
establish the plan and all of its features, administer the plan, and to
act as a fiduciary, hire service providers, and select investments and
investment managers. Further, at this point in time, business models
for these plans are still being developed.\9\ In light of all of this,
the Department does not agree that a question that requires a pooled
plan provider to identify whether it or any of its affiliates will
provide services to a pooled employer plan is unreasonable or excessive
in scope. In response to specific commenters' concerns about the
vagueness of the proposal's requirement to explain the role of
affiliates in connection with providing services, the final rule has
been simplified to require merely an identification, by name and EIN,
of any affiliate that is expected to provide services to the pooled
employer plan. This will allow the Department to follow up as
necessary.
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\9\ 85 FR 36880 (June 18, 2020) (titled Prohibited Transactions
Involving Pooled Employer Plans Under the SECURE Act and Other
Multiple Employer Plans).
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10. A statement disclosing any ongoing Federal or State criminal
proceeding, or any Federal or State criminal convictions, related to
the provisions of services to, operation of, or investments of, any
employee benefit plan against the pooled plan provider, or any officer,
director, or employee of a pooled plan provider, provided that
disclosure of any criminal conviction may be omitted if the conviction,
or related term of imprisonment served, is outside ten years of the
date of the registration. This provision in paragraph (b)(1)(ix) of the
final rule was adopted from the proposed regulation with only one non-
substantive change. A few commenters argued that this provision need
not focus on individual employees of the pooled plan provider for
reasons of privacy, as well as for reasons of scope and burden. In
terms of privacy, this provision encompasses only information (e.g.,
caption, docket number, State) that is already in the public record.
For instance, if the entire case is under seal and there is no docket
or caption, the filer would not need to disclose the existence of any
such sealed case. In terms of scope, a commenter objected to the notion
that a pooled plan provider would have to report criminal conviction
information about ``any employee''--including rank-and-file employees,
such as janitors or maintenance staff, whose positions make it unlikely
that they could threaten the safety of a pooled employer plan. These
commenters also noted that the firms likely to be pooled plan providers
have thousands of employees. Like the proposal, however, the final rule
does not reach as broadly as some commenters suggest. This provision
reaches only those rank-and-file employees of the pooled plan provider
whose conviction relates to providing services to, the operation of, or
investments of, an employee benefit plan, and whose conviction or
imprisonment is within the last ten years. The final rule retains this
provision because it focuses on relevant negative information that will
be useful in the Department's oversight of pooled plan providers. Other
statutory provisions in ERISA already evidence the relevance of this
type of activity and inform the scope of paragraph (b)(1)(ix) of the
final rule. For example, under ERISA section 411, the Department is
responsible for ensuring that disqualified parties do not serve in
positions or capacities prohibited under the statute.\10\ Although
paragraph
[[Page 72943]]
(b)(1)(ix) of the final rule is intentionally constructed without all
the technical nuance and specifications in section 411 of ERISA, that
statutory provision prohibits individuals convicted of disqualifying
crimes from serving in plan-related capacities during or for a period
of 13 years after such conviction or the end of imprisonment, whichever
is later, subject to provisions allowing that period to be
shortened.\11\
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\10\ Section 411 of ERISA provides ``[n]o person who has been
convicted of, or has been imprisoned as a result of his conviction
of, robbery, bribery, extortion, embezzlement, fraud, grand larceny,
burglary, arson, a felony violation of Federal or State law
involving substances defined in section 802(6) of title 21, murder,
rape, kidnaping, perjury, assault with intent to kill, . . . any
felony involving abuse or misuse of such person's position or
employment in a labor organization or employee benefit plan to seek
or obtain an illegal gain at the expense of the members of the labor
organization or the beneficiaries of the employee benefit plan . . .
shall serve or be permitted to serve . . . (1) as an administrator,
fiduciary, officer, trustee, custodian, counsel, agent, employee, or
representative in any capacity of any employee benefit plan, (2) as
a consultant or adviser to an employee benefit plan, including but
not limited to any entity whose activities are in whole or
substantial part devoted to providing goods or services to any
employee benefit plan, or (3) in any capacity that involves
decision-making authority or custody or control of the moneys,
funds, assets, or property of any employee benefit plan . . . .''
\11\ See also Beck v. Levering, 947 F.2d 639 (2d Cir. 1991) (in
a civil action, permitting lifetime injunction against an individual
from providing services to ERISA plans).
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Finally, the proposal specifically solicited comments on whether
civil judgments in private litigation should be added to this
provision, and if so, the types. In the Department's view, criminal
judgments are more likely, as a broad category, to be good indicators
of the need for additional review or inquiry than are civil judgments
in private litigation. None of the commenters unambiguously advocated
including civil judgments of this type in this provision, accordingly,
the Department declines to expand this provision in this manner. A non-
substantive change was made to this provision. For organizational
purposes, the words ``ongoing'' and ``proceedings'' were moved to this
provision from paragraph (b)(1)(x) of the proposal to accommodate
changes made to that provision.
11. A statement disclosing any ongoing civil or administrative
proceedings in any court or administrative tribunal by the Federal or
State government or other regulatory authority against the pooled plan
provider, or any officer, or director, or employee of the pooled plan
provider, involving a claim or fraud or dishonesty with respect to any
employee benefit plan, or involving the mismanagement of plan assets.
Paragraph (b)(1)(x) of the proposal required the initial filing to
include a statement disclosing any ongoing criminal, civil, or
administrative proceedings related to the provisions of services to,
operation of, or investments of any employee benefit plan, in any court
or administrative tribunal by the Federal or State government or other
regulatory authority against the pooled plan provider or any officer,
director, or employee of the pooled plan provider.\12\ Similar to the
information on criminal convictions, this data element focuses on
information that may be useful in the Department's oversight of pooled
plan providers and that may also assist employers performing due
diligence in selecting and monitoring pooled employer plans.
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\12\ Other regulatory authority includes self-regulatory
organizations authorized by law, such as the Financial Industry
Regulatory Authority (FINRA). However, as used in the final rule,
other regulatory authority does not include any foreign regulatory
authorities.
---------------------------------------------------------------------------
Regarding ongoing administrative proceedings (as opposed to
criminal and civil proceedings), a number of commenters were concerned
that the clause ``any ongoing administrative proceeding'' could be read
to include routine audits, investigations, or informal inquiries by
Federal and State regulators. These commenters stated that most pooled
plan providers likely will be financial service organizations that are
routinely subject to investigations, audits, and other administrative
actions by any number of Federal and State agencies and that requiring
these providers to report such actions would be burdensome and
potentially misleading as to the ``risks'' of working with a specific
provider. These commenters suggested limiting the scope of the types of
administrative proceedings falling into this category in a manner that
does not include routine administrative activities carried out by
executive agencies as part of their routine oversight functions and
responsibilities.
In response to these commenters, the Department agrees that the
public would benefit from a more precise definition of ``administrative
proceeding'' that does not include routine regulatory oversight
activities of the type suggested by some commenters and that the scope
of this provision could be narrowed without compromising the
Department's objectives. Paragraph (b)(1)(x) of the final rule,
therefore, is limited to formal administrative hearings. This
limitation was accomplished by adding a definition of ``administrative
proceeding'' in paragraph (b)(8) of the final rule. This definition is
grounded in established procedures for administrative hearings by the
Department.\13\ Paragraph (b)(8) defines this term to mean ``a
judicial-type proceeding of public record before an administrative law
judge or similar decision-maker.'' The key elements of this definition
ensure a level of formality and process that operate to exclude the
types of routine administrative proceedings mentioned by the
commenters, such as routine audits, examinations, and benefits reviews
by executive-branch agencies. In sum, the definition elevates the level
of administrative proceeding above the numerous array of preliminary
administrative and oversight activities mentioned by the commenters, to
proceedings that involve disputes that are ripe for adjudication and
matters that are of public record.
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\13\ See, e.g., 29 CFR 2571.2 (Procedures for Administrative
Hearings on the Issuance of Cease and Desist Orders Under ERISA
Section 521--Multiple Employer Welfare Arrangements).
---------------------------------------------------------------------------
Additionally, regarding all three types of proceedings covered by
paragraph (b)(1)(x) of the proposal (criminal, civil, and
administrative), many commenters raised concerns regarding the general
breadth of activities covered by this provision of the proposal. They
requested a more substantial limitation on the type of activities
covered by the subject proceedings than merely any act ``related to''
the ``operation of'' or ``investments of'' any employee benefit plan to
which the pooled plan provider has a commercial (service or
investments) relationship. Additionally, the commenters were concerned
with the proposal's extension of this provision to ``any . . .
employee'' of the pooled plan provider. Many pooled plan providers will
likely be large firms and may have thousands-even tens of thousands-of
employees, according to the commenters. The commenters maintained that
the cumulative effect of these open-ended or undefined concepts will
result in an expensive, impracticable, or unworkable registration.
In response to these commenters, the final rule makes another
narrowing change to the proposal. The Department has determined that,
without this additional change, this aspect of the final rule may be
impractical for large providers and could result in so much reporting
that the registration requirement would become less useful.
Accordingly, paragraph (b)(1)(x) of the final rule limits the type of
reportable event to matters involving claims of fraud or dishonesty
with respect to any employee benefit plan, or involving the
mismanagement of plan assets. These matters go to the core of the
Department's oversight responsibilities and, similarly, should be of
utmost relevance to potential or participating employers. These changes
will reduce the reporting burden on pooled plan providers, while
improving the quality of the information on file by encompassing only
the most egregious
[[Page 72944]]
claims. Commenters' concerns regarding the coverage of rank-and-file
employees are not without merit. Limiting the scope of actions as
described in this paragraph addresses this concern.\14\
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\14\ The preamble to the proposal provided that, for purposes of
registration, employees of the pooled plan provider would include
employees of the pooled employer plan, but only those who handle
assets of the plan within the meaning of section 412 of ERISA or who
are responsible for the operations or investments of the plan. 85 FR
54288. The intent of this provision is to avoid potential oversight
gaps by treating certain employees of the pooled employer plan, if
any, as if they are employees of the pooled plan provider in order
to subject them to the disclosure requirements of the regulation.
The provision identifies a subset of employees of the pooled
employer plan who are in important positions of plan operations or
handle plan assets. Commenters did not raise questions or concerns
about this provision. Therefore, the final rule adopts this
provision as proposed. In response to one comment, however, this
provision was relocated from the preamble to paragraph (b)(10) of
the final rule for complete transparency.
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Finally, the proposal specifically requested comments on the
feasibility and advisability of expanding this provision in the final
rule to include settlements of fiduciary liability claims against
pooled plan providers with the Department or the Pension Benefit
Guaranty Corporation, including settlements under ERISA Sec.
206(d)(4)(A)(iii). Commenters were asked whether such information would
be helpful to employers performing due diligence in selecting and
monitoring pooled employer plans. The commenters who responded to this
specific request uniformly rejected such an expansion. They reasoned
that most lawsuits are settled without admission of fault and
disclosure of such information, therefore, would not necessarily prove
itself to be helpful or reliable to prospective or participating
employers and may even have adverse or otherwise chilling effects on
the establishment of pooled plan providers and pooled employer plans.
Based on the public record, the Department declines to expand this
provision in this manner.
B. Reportable Event Supplemental Filings
The final rule provides for two types of supplemental filings. The
first type focuses on the commencement of operations by a pooled plan
provider of a pooled employer plan. The second type of supplemental
filing deals more generally with changes in circumstances of the pooled
plan provider that have occurred since the provider's initial filing.
Both types of supplemental filings will provide important information
to the Department, the Treasury Department, and the IRS, to help them
protect plan participants and beneficiaries and conduct more effective
monitoring and oversight of pooled employer plans and pooled plan
providers. Without this kind of timely information, the agencies would
typically not learn of risks to a pooled employer plan until the plan
files a Form 5500, possibly many months after the event (assuming the
information was even required to be reported on the Form 5500), and
when opportunities for protecting plan participants from financial
injury have been missed. Reporting changes in the previously filed
registration information also will help the Department ensure that the
information regarding pooled plan providers posted on its website and
available to the public is up to date. Otherwise the Department,
employers, and the public would have to rely on outdated information
until a Form 5500 was filed for the plan and then would need to compare
the registration information with the subsequently filed information
about pooled plan providers in Forms 5500 submitted by the pooled plan
provider on behalf of the pooled employer plans the providers operate.
The need to rely upon, compare, and resolve differences between
registration statements and Forms 5500 would dramatically reduce the
value of registration filings as a ready and reliable data source for
the Department, employers, and the public.
Commencement of a Pooled Employer Plan--Paragraph (b)(2)
Paragraph (b)(2) of the final rule requires a pooled plan provider
to file a supplemental report before beginning to operate a pooled
employer plan. The supplemental filing must contain the name and plan
number (PN) that the pooled employer plan will use for annual
reporting, and the name, address, and EIN for the trustee for the
plan.\15\ Under paragraph (b)(2), this supplemental information must be
filed ``[n]o later than the initiation of operations of a plan as a
pooled employer plan.'' Sometimes, however, a pooled plan provider will
know this information at the time it submits its initial filing. If so,
paragraph (b)(2) is satisfied if the pooled plan provider includes this
information with the initial filing. This supplemental information must
be reported earlier than the other supplemental information required
pursuant to paragraph (b)(3) of the final rule, which must be reported
within the later of 30 days after the calendar quarter in which the
reportable event occurred or 45 days after a reportable event. The
earlier timing requirement in paragraph (b)(2) arises from Code section
413(e)(3), which provides that the requirements to be a pooled plan
provider (including the requirement to register with the Secretary of
the Treasury before beginning operations as a pooled plan provider)
must be satisfied ``with respect to any plan.''
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\15\ Subsequent filings on Form 5500 are publicly available
through the Department's EFAST website, available at efast.dol.gov.
Using the EFAST search function, an interested person may review any
Form 5500 filings by a specific pooled employer plan by entering the
plan's name and PN.
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One change was made to this provision from the proposed regulation.
Whereas the proposal required the EIN for the pooled employer plan,
paragraph (b)(2) of the final rule requires the PN that the pooled
employer plan will use for annual reporting purposes. Paragraph
(b)(1)(iii) of the final rule already requires disclosure of the EIN of
the pooled plan provider. Thus, the combination EIN/PN for each pooled
employer plan would be the pooled plan provider's nine-digit EIN and
the three-digit PN that the pooled plan provider assigns to each pooled
employer plan it operates. This change eliminates the burden on a
pooled plan provider to obtain a separate EIN for each pooled employer
plan it operates. Instead, the pooled plan provider simply uses its own
EIN and self-assigns a PN for the particular pooled employer plan. This
change also establishes a much stronger link between the Form PR and
the pooled employer plan's Forms 5500 Annual Return/Report. One
commenter requested the Department, among other things, to take active
efforts to ensure that the pooled plan provider's Form PR and the
pooled employer plan's annual reports will be appropriately cross-
linked. This change responds to this commenter's request.
Other Reportable Events--Paragraph (b)(3)(i) through (v)
Paragraph (b)(3) of the final rule requires a supplemental filing
for any changes in the previously reported registration information and
for certain specified events within the later of 30 days after the
calendar quarter in which the change or reportable event occurred or 45
days after a reportable event. This is a longer period than was
permitted under the proposed regulation, which required a supplemental
filing within 30 days of each such reportable event. This extension was
based on commenters' concerns with the brevity of the timeframe in the
proposal.
In evaluating the 30-day deadline in the proposal, the commenters
were concerned that they would need to establish a complex and costly
tracking system to monitor for supplemental
[[Page 72945]]
reporting events, reducing the profit margins and incentives to offer
pooled employer plans. The commenters argued that the number and scope
of potential reportable events would effectively require daily tracking
and reporting because every day necessarily is the end of a prior 30-
day period. The commenters suggested an annual updating requirement as
an alternative.
In response to these concerns, the final rule requires a
supplemental filing for any changes in the previously reported
registration information and for certain specified events within the
later of 30 days after the calendar quarter in which the change or
reportable event occurred or 45 days after a reportable event. The
Department agrees with the commenters that the proposal's 30-day
deadline could have potentially created unnecessary burden for some
pooled plan providers. The Department, however, is unable to conclude
that a single annual update for all reportable events that occurred in
that year reliably provides the Department, other agencies, and
participating employers with sufficiently timely information to
discharge the obligations that underpin the establishment of this rule.
Such an approach would reduce the reliability of registration
information, which could be quite stale. For instance, an annual update
of the sort recommended by the commenters would be well in excess of
the 180 days creditors generally have to file against a debtor in
matters of bankruptcy. Further, the final rule limits the scope of the
supplemental reporting requirements in paragraph (b)(3)(iii) of the
final rule, potentially obviating at least some of the concerns
underpinning the length of commenters' request. On balance, the
Department believes the ``quarterly'' rule in the final regulation
strikes a fair balance between the proposal and the commenters'
request. The Department recognizes that an occurrence triggering a
supplemental filing could happen within days of the end of a quarter;
the final rule thus provides that pooled plan providers at a minimum
will have 45 days to submit a supplemental filing.
Changes that trigger a supplemental filing under paragraph (b)(3)
are as follows:
1. Changes in information previously reported. Paragraph (b)(3)(i)
of the final rule requires a supplemental filing in the case of a
change in the registration information previously reported by the
pooled plan provider. This provision in the final rule is the same as
in the proposed rule with one non-substantive change. One commenter
suggested that we limit the changes that require a supplemental filing
under paragraph (b)(3)(i) to those that are ``material.'' The
Department declines this suggestion because, in its view, all of the
registration information required in an initial filing is material. The
purpose of paragraph (b)(3)(i) of the final rule is to ensure that the
registration information the Department has, and that it posts on its
website, is accurate and up to date so that the Department and
prospective and participating employers are able to perform their
oversight and due diligence activities, respectively, and accurate and
up-to-date information is essential to these functions. Moreover, in
other parts of this final rule, we have circumscribed the information
that is to be included in an initial filing and have also extended the
timeframe for submitting the supplemental filing, both of which should
ameliorate concerns that registrants potentially would be filing
copious non-material information. The non-substantive change is to
clarify that updated disclosure relating to criminal, civil, or
administrative proceedings need not be made pursuant to paragraph
(b)(3)(i) if such information is otherwise being disclosed pursuant to
paragraphs (b)(3)(iii)-(v).
2. Changes in corporate or business structure. Paragraph (b)(3)(ii)
of the final rule requires a supplemental filing in the case of any
significant change in corporate or business structure of the pooled
plan provider, e.g., merger, acquisition, or initiation of bankruptcy,
receivership, or other insolvency proceeding for the pooled plan
provider or affiliate that provides services to any pooled employer
plan, or ceasing all operations as a pooled plan provider. A
significant change in corporate or business structure could have
consequences that affect the pooled employer plans as well as
participating employers and covered employees and could also give rise
to possible conflicts of interest that would not have existed in the
absence of the transaction.
One clarification was made to this provision from the proposed
regulation. The proposal would have required a supplemental filing in
the case of an insolvency proceeding of an affiliate of a pooled plan
provider regardless of whether the affiliate provides services to a
pooled employer plan. Some commenters broadly questioned the need for
any supplemental reporting of any event involving affiliates of the
pooled plan provider, arguing that this registration requirement should
be limited to pooled plan providers only. Other commenters, however,
suggested that insolvency proceedings of affiliates may be relevant for
purposes of this rule if the affiliate provides services to the pooled
employer plan. The Department agrees with these commenters that
insolvency proceedings of an affiliate of the pooled plan provider are
more relevant when the affiliate is a service provider of the pooled
employer plan, and less so when the affiliate has no service
relationship to the plan. Information about an insolvency proceeding of
an affiliate that does not provide services to the pooled employer
plan, although not irrelevant, may be in excess of what is necessary
for the Department to discharge its oversight obligations under the
statute. Such information, moreover, may be of limited or no value to
participating employers with respect to their selection and monitoring
obligations identified in section 3(43) of ERISA. Accordingly,
information about an insolvency proceeding of an affiliate does not
have to be reported in a supplemental filing under the final rule,
unless the affiliate is a service provider of a pooled employer plan.
In these circumstances, the Department believes the cost of the
disclosure is justified by its value to oversight officials. The
Department added ``that provides services to any pooled employer plan''
to paragraph (b)(3)(ii) to effect this clarification.\16\
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\16\ In response to a comment seeking confirmation, the
Department confirms that the supplemental reporting with respect to
merger or acquisition relates only to ``M&A'' activity of the pooled
plan provider, not any of its affiliates.
---------------------------------------------------------------------------
One commenter suggested that the Department consider narrowing this
proposed requirement even further to limit reporting of mergers and
acquisitions of pooled plan providers. These events, according to this
commenter, could be quite common for financial corporations and in some
cases, may involve entities that will have no relation to the pooled
employer plan. Instead of a blanket reporting obligation, the commenter
recommend limiting this requirement to situations that will directly
impact the pooled plan provider and its pooled employer plan offerings.
The Department declines to adopt this suggestion because the pooled
plan provider serves a critical role in sponsoring the pooled employer
plan and therefore significant changes in its corporate or business
structure may raise important considerations with respect to the plan.
Unlike the disclosure provisions related to insolvency, this provision
only applies to the pooled plan provider and does not apply to any
affiliates. Therefore, the Department believes that the burden in
providing this disclosure will be infrequent and low.
3. Receipt of notice of new administrative proceedings or
[[Page 72946]]
enforcement actions. Paragraph (b)(3)(iii) of the proposed regulation
required supplemental reporting by the registrant on ``receipt of
written notice of the initiation of any administrative or enforcement
action related to the provision of services to, operation of, or
investments of any pooled employer plan or other employee benefit plan,
in any court or administrative tribunal by any Federal or State
governmental agency or other regulatory authority against the pooled
plan provider or any officer, director, or employee of the pooled plan
provider.'' Commenters raised similar concerns with this provision in
the proposal as with paragraph (b)(1)(x) of the proposal (which dealt
with disclosures of ongoing criminal, civil, or administrative
proceedings). These concerns were mostly based upon the provision's
scope and breadth, particularly regarding the types of actions, the
types of administrative proceedings, and the class of actors against
whom actions would be initiated. The Department narrowed the scope of
paragraph (b)(1)(x) of the final rule in two ways, as discussed above
in this preamble. The Department, therefore, narrowed the scope of
paragraph (b)(3)(iii) of the final rule to match the scope of paragraph
(b)(1)(x) of the final rule. Accordingly, paragraph (b)(3)(iii) of the
final rule requires a supplemental filing if a pooled plan provider
receives written notice of the initiation of any administrative
proceeding or enforcement action in any court or administrative
tribunal by any Federal or State governmental agency or other
regulatory authority against the pooled plan provider, or any officer,
director, or employee of the pooled plan provider involving a claim of
fraud or dishonesty with respect to any employee benefit plan, or
involving the mismanagement of plan assets. Timely knowledge of such
actions will help the agencies fulfill their oversight functions and
assist prospective and existing participating employers in properly
carrying out their duties under the SECURE Act provisions with respect
to selection and monitoring of pooled employer plans.
4. Receipt of notice of finding of fraud, dishonesty, or
mismanagement. Paragraph (b)(3)(iv) of the final regulation requires a
supplemental filing if the registrant receives written notice of a
negative finding in any matter described in paragraph (b)(1)(x) or
(b)(3)(iii) of this section. This provision is essentially the same as
its predecessor in the proposed rule, although changes were made to
conform to revisions to paragraphs (b)(1)(x) and (b)(3)(iii) of the
final rule. Those revisions to paragraphs (b)(1)(x) and (b)(3)(iii) of
the final rule, which dictated the revisions to paragraph (b)(3)(iv),
are discussed above in this preamble. The purpose of paragraph
(b)(3)(iv) of the final regulation is to capture the findings, if
negative, of the proceedings described in paragraphs (b)(1)(x) and
(b)(3)(iii) of the final regulation. A decision is negative if there is
finding of fraud or dishonesty related to providing services to any
employee benefit plan (including a pooled employer plan), or if there
is a finding of mismanagement of plan assets. This information is
important for agency oversight and for participating employers with
respect to their duties under the SECURE Act provisions regarding
selection and monitoring of the pooled employer plans.
5. Receipt of notice of filing of criminal charges. Paragraph
(b)(3)(v) of the final rule requires a supplemental filing if a pooled
plan provider receives written notice of the filing of any Federal or
State criminal charges related to the provision of services to,
operation of, or investments of any pooled employer plan or other
employee benefit plan against the pooled plan provider or any officer,
director, or employee of the pooled plan provider. Such actions, too,
are relevant to the selection and monitoring obligations of
participating employers, and while ERISA section 411 bars serving as an
ERISA fiduciary following a wide range of crimes, this information is
limited to those criminal charges related to the provision of services
to, operation of, or investments of any pooled employer or other
employee benefit plan. Commenters did not raise questions or concerns
with this requirement. Therefore, the final rule adopts this provision
as proposed.
Although the final rule largely adopts the proposed criminal
disclosures without change, the Department is concerned with potential
reputational harm in the cases of persons acquitted of the criminal
charges for which a prior reporting has been made under this section.
To address this concern, the Department added paragraph (d) to the
final rule. Paragraph (d) provides that a pooled plan provider may file
an update to remove any matter previously reported under paragraph
(b)(1)(ix) or (b)(3)(v) of the final rule for which the defendant has
received an acquittal.'' For this purpose, the term ``acquittal'' means
a finding by a judge or jury that a defendant is not guilty or any
other dismissal or judgment which the government may not appeal and
includes situations where a prosecuting authority voluntarily dismisses
charges with an ability to subsequently re-file. Likewise, the
Department reserves the right to remove such information independently
or in response to a request from a person acquitted of such charges.
C. Amendment and Correction of Registration Information
Pooled plan providers can file corrections and amendments of their
initial registration and reportable event filings though the electronic
filing system. Inadvertent or good faith errors in registrations do not
nullify a person's status as a pooled plan provider, provided that a
corrected or amended filing is submitted within a reasonable period of
the discovery of the error or omission. If correcting only information
previously reported, such as entry of an incorrect name for the agent
for service of legal process, a person would indicate on the form that
the filing is an amended filing, not a supplemental filing.
Further, the Department expects to propose, through a separate
rulemaking, new questions on the Form 5500 that would ask whether a
pooled plan provider filed its registration statement with the
Secretary, including any required updates, and to report the electronic
confirmation number provided to the pooled plan provider at the time
that the registration was received. These would be similar to the
questions currently on the Form 5500 that require reporting by multiple
employer group health plans about their compliance with registration
and reporting requirements on the Form M-1 (Report for Multiple
Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming
Exception (ECEs)). The questions would provide the Department, the
Treasury Department, the IRS, participating employers, and other
stakeholders with information that would allow them to connect the Form
PR registration with the Form 5500 for all pooled employer plans
operated by the registrant.
D. Final Filing
If a pooled plan provider has ceased operating all pooled employer
plans and has filed a supplemental reportable event filing to indicate
that the last pooled employer plan for which it served as the pooled
plan provider has been terminated and ceased operating, the provider is
required to file a final registration filing. For this purpose, a plan
is treated as terminated and having ceased operations when a resolution
has been adopted terminating the plan, all
[[Page 72947]]
assets under the plan (including insurance/annuity contracts) have been
properly distributed to the participants and beneficiaries or legally
transferred to the control of another plan, and when a final Form 5500
has been filed for the plan. The final Form PR filing is due within the
later of (a) 30 days after the calendar quarter in which the final Form
5500 for the last pooled employer plan operated by the pooled plan
provider was filed,\17\ or (b) 45 days after such filing. A single
combined filing may be used both to report the date that the last
pooled employer plan operated by the provider has been terminated and
ceased operating, including filing the final Form 5500 in accordance
with its instructions, and to serve as the final Form PR filing by the
pooled plan provider. The final filing assists the Department's
maintenance of an accurate database of persons serving as pooled plan
providers and provides accurate public information about pooled plan
providers to employers, participants, beneficiaries, and other
interested persons.
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\17\ A final Form 5500 cannot be filed for a pooled employer
plan until all assets under the plan (including insurance/annuity
contracts) have been distributed to the participants and
beneficiaries or legally transferred to the control of another plan.
The final Form 5500 must be filed, absent an extension of time, no
later than the last day of the 7th calendar month after the end of
the plan year in which the plan terminated, but it can be filed
earlier, including as a short plan year filing, if the pooled
employer plan were to cease having participants and beneficiaries
and distribute all the assets in the middle of a plan year.
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E. Electronic Filing
This final regulation requires electronic filing of all pooled plan
provider registrations with the Department. The Department is using the
same electronic system for pooled plan providers to file the Form PR
that plan administrators currently use to file the Form 5500. Regular
mail is not the most efficient or cost-effective way to file and
process this information. Because the internet is widely accessible to
persons who the Department expects to be interested in being pooled
plan providers, they will find electronic filing easier and more cost-
effective than paper filing. The electronic submission process will
also assist pooled plan providers by ensuring that all required
information is included in the registration before the electronic
filing can be completed through the internet site. In addition, the
process provides an electronic registration confirmation receipt.
Electronic filing also will facilitate the disclosure of the
information to participating employers, covered participants and
beneficiaries, and other interested members of the public. Once a
registration is filed, the data would be posted on the Department's
website and be available to the public. Therefore, filers and data
users all stand to benefit from electronic filing in ways that are
consistent with the goals of the E-Government Act of 2002.\18\
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\18\ Public Law 107-347, sec. 2 (Dec. 17, 2002).
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Under ERISA Section 505, in addition to having the authority to
prescribe such regulations the Department determines may be necessary
or appropriate to carry out the provisions of Title I of ERISA, the
Department has the authority to prescribe forms. The Department used
this authority to create the Form PR. Form PR and the accompanying
instructions are the required filing format for pooled plan provider
registrations and the Form PR must be filed electronically with the
Department of Labor at https://www.efast.dol.gov/.
F. Coordination With the Treasury Department and the Internal Revenue
Service
The SECURE Act requires pooled plan providers to register with the
Department as well as with the Treasury Department and the IRS. The
Department coordinated with those agencies to develop the final
regulation. Filing the registration statement with the Department,
including the supplemental statement identifying a pooled employer plan
for which the pooled plan provider is acting in that capacity prior to
the initiation of operations of each such plan, satisfies the Code
requirement to register as a pooled plan provider with respect to that
plan. The Department will continue to consult with the Treasury
Department and the IRS in connection with their development of the
pooled plan provider registration requirements and filing process.
G. Good Cause Finding for Immediate Registration
The Administrative Procedure Act (5 U.S.C. 553 (d)) (APA) permits a
rule to become effective immediately, rather than after a 30-day delay,
if there is good cause to do so. The SECURE Act allows pooled plan
providers to begin operations on January 1, 2021, but only if they
first register with the Department. Commenters on the proposed rule
requested that the Department make the registration process available
as soon as possible. Some commenters even requested that the Department
accept registrations before publication of a final rule. The Department
agrees that pooled plan providers will benefit from having the ability
to register immediately, and not wait for a 30-day effective date
period. For those providers that plan to begin operating a pooled
employer plan on January 1, 2021, making them wait for the expiration
of the APA's 30-day effective-date period will unnecessarily compress
their overall start-up obligations into a smaller window of time and
may, in fact, impede a provider's contractual obligation to begin
operation of a pooled employer plan on January 1, 2021. Moreover, no
one is harmed by allowing registrants to file early, as the statute
itself does not allow pooled employer plans to begin operations until
January 1, 2021. In fact, an immediate effective date will allow
important information to be publicly available that will enable
employers, and ERISA plan participants and beneficiaries, more time to
evaluate the bona fides of a particular pooled employer plan.
Accordingly, the Department finds there is good cause for the final
rule to become effective immediately, rather than after a 30-day delay.
Regulatory Impact Analysis
Summary--The SECURE Act was enacted to expand retirement savings.
Section 101 of the SECURE Act amends section 3(2) of ERISA to eliminate
the commonality of interest requirement for establishing certain
individual account plans, or ``pooled employer plans,'' that meet
specific requirements. Among these requirements, such plans must
designate a pooled plan provider to serve as a named fiduciary and as
the plan administrator. Further, section 101 of the SECURE Act requires
pooled plan providers to register with the Department and the Treasury
Department before beginning operations. The statute expressly provides
a separate authorization for the Department to require additional
information.
The Department has examined the effects of this rule as required by
Executive Order 12866,\19\ Executive Order 13563,\20\ the Congressional
Review Act,\21\ Executive Order 13771,\22\ the Paperwork Reduction Act
of 1995,\23\ the Regulatory Flexibility Act,\24\ section 202 of the
Unfunded Mandates Reform
[[Page 72948]]
Act of 1995,\25\ and Executive Order 13132.\26\
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\19\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
\20\ Improving Regulation and Regulatory Review, 76 FR 3821
(Jan. 18, 2011).
\21\ 5 U.S.C. 804(2) (1996).
\22\ Reducing Regulation and Controlling Regulatory Costs, 82 FR
9339 (Jan. 30, 2017).
\23\ 44 U.S.C. 3506(c)(2)(A) (1995).
\24\ 5 U.S.C. 601 et seq. (1980).
\25\ 2 U.S.C. 1501 et seq. (1995).
\26\ Federalism, 64 FR 153 (Aug. 4, 1999).
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1.1. Executive Orders
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health,
and safety effects; distributive impacts; and equity). Executive Order
13563 emphasizes the importance of quantifying costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility.
Under Executive Order 12866, ``significant'' regulatory actions are
subject to review by the Office of Management and Budget (OMB).\27\
Section 3(f) of the Executive Order defines a ``significant regulatory
action'' as an action that is likely to produce a rule that does any of
the following:
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\27\ Regulatory Planning and Review, supra note 2.
---------------------------------------------------------------------------
(1) Has an annual effect on the economy of $100 million or more in
any one year, or adversely and materially affects a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities
(such actions are also referred to as ``economically significant'');
(2) creates a serious inconsistency or otherwise interferes with an
action taken or planned by another agency;
(3) materially alters the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) raises novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
A full regulatory impact analysis must be prepared for major rules
with economically significant effects (for example, impacts of $100
million or more in any one year), and OMB reviews ``significant''
regulatory actions. OMB determined that this rule is not economically
significant within the meaning of section 3(f)(1) of the Executive
Order but is significant under 3(f)(4). Therefore, the Department has
provided an assessment of the potential costs, benefits, and transfers
associated with this final rule. In accordance with the provisions of
Executive Order 12866, OMB has reviewed this final rule.
1.2. Introduction and Need for Regulation
As added by the SECURE Act, section 3(44) of ERISA requires a
person to register as a pooled plan provider with the Secretary, and
provide other information the Secretary may require, before operating a
pooled employer plan. This final rule responds to the direction given
to the Secretary in the SECURE Act and specifies the requirements for
registering with the Secretary.
The required information allows the Department to identify pooled
plan providers so that it may monitor their actions. While the Form
5500, which pooled plan providers will also be required to file,
collects important information, Form 5500 reporting is generally
unavailable for more than 18 months after a plan starts. The SECURE
Act's registration requirement gives the Department more immediate
access to pooled plan provider information, allowing the Department
(and other agencies) to observe how this new market develops and assess
the need for further guidance.
1.3. Affected Entities
The goal of the SECURE Act is to increase retirement savings,
particularly by expanding the options for small employers to
participate in multiple employer plans, such as pooled employer plans.
The Department expects this expansion to produce administrative savings
and new opportunities to provide retirement savings plans for many
small employers. Section 101 of the SECURE Act allows commercial
service providers to serve as plan administrators and named fiduciaries
of defined contribution pension plans that offer retirement benefits to
the employees of more than one unrelated employer. Expanding the ways
in which service providers and employers may craft and join multiple
employer plans (including pooled employer plans) should reduce costs
and administrative burdens for participating employers. For example, a
single Form 5500 filing by the pooled plan provider would satisfy the
annual reporting requirement for all the participating employers,
instead of separate Form 5500 filings and audits for each individual
employer. Pooled plan providers would be both a named fiduciary and
plan administrator for the pooled employer plan, and they are required
to register with the Department before operating any such plans.
The Department has identified certain existing entities that it
believes would be most likely to serve as pooled plan providers. For
example, recordkeepers that currently administer retirement plans may
be well positioned to serve as pooled plan providers and some
recordkeepers have affiliated entities that may seek to provide
investment alternatives and services to the plan. Similarly, many
Professional Employer Organizations (PEOs) have served as plan
administrators and would likely have relevant experience to serve as
pooled plan providers. Further, insurance companies have expressed
interest in serving as pooled plan providers and some have prior
experience providing similar services. Chambers of Commerce have
connections with employers, but many are small with few full-time
staff. Also, few Chambers of Commerce have sponsored MEWAs. While
retirement plan advisors such as broker-dealers and registered
investment advisers are also plausible candidates, the Department
believes that some would be reluctant to assume the named fiduciary and
plan administrator roles. Entities such as registered investment
advisors may be more comfortable serving as section 3(38) investment
managers for the pooled plan providers.
Given these considerations, the Department estimates that
approximately 3,200 unique entities will initially register to serve as
pooled plan providers. Recordkeepers and plan administrators of
existing defined contribution plans are most likely to enter the
market, followed by PEOs, direct annuity writers, Chambers of Commerce,
and plan advisors.
Estimated Pooled Plan Provider
----------------------------------------------------------------------------------------------------------------
Expected share Estimated
Universe (%) number
----------------------------------------------------------------------------------------------------------------
Unique Recordkeepers and Plan Administrators for existing DC 2,378 50 1,189
Plans \a\......................................................
Professional Employer Organizations \b\......................... 907 25 227
[[Page 72949]]
Chambers of Commerce \c\........................................ 4,000 5 200
Large Broker-Dealers \d\........................................ 173 5 9
Registered Investment Adviser Firms \d\......................... 30,246 5 1,512
Direct Annuity Writers (Insurance Companies) \e\................ 386 25 97
-----------------------------------------------
Total....................................................... 38,090 8 3,233
----------------------------------------------------------------------------------------------------------------
\a\ 2017 Form 5500 Schedule C Data.
\b\ National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics'' https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
\c\ Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-
time staff person.
\d\ 2019 FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500
or more registered representatives.
\e\ National Association of Insurance Commissioners.
1.4. Benefits
The SECURE Act requirement that pooled plan providers first
register with the Department before beginning operations alerts
regulators to the presence and intent of new entities. Registering
allows potential pooled plan providers access to this newly created
market. These registrations would require contact information, the
address of any public website(s) of the pooled plan provider or
affiliates used to market such person as pooled plan provider to the
public, and the date operations are expected to commence. The
registrations will be publicly available and provide a complete list of
registered pooled plan providers. In addition, the supplemental filing
requirement ensures that providers update their initial filing to
report changes relevant to the pooled plan provider's and participating
employers' fiduciary duties (including, for example, inception of
bankruptcy and criminal or regulatory enforcement actions against the
pooled plan provider involving a claim of fraud or dishonesty with
respect to any employee benefit plan, or involving the mismanagement of
plan assets). This will help provide transparency regarding the
provider's management and business practices, allowing employers to
better survey the market when choosing a pooled plan provider or
deciding whether to continue to rely on an existing provider and
enabling the Department and Treasury Department to carry out their
statutory oversight duties.
Some commenters were concerned that the information required in the
registration would expose pooled plan providers to litigation risk and
a heightened degree of regulatory scrutiny. Some commenters also were
concerned that disclosing ongoing criminal, civil, or administrative
proceedings against the pooled plan providers would deter employers
from engaging with pooled plan providers. While the Department
acknowledges these concerns, the Department believes that the
registration and supplemental filing requirements will provide the
Department, other agencies, and potential or participating employers
information (including transparency regarding fraud, dishonesty, and
mismanagement of plan assets) they need to discharge their legal
obligations under the law.
In the Department's view, the statutory purpose of the registration
requirement is to provide the Department with sufficient information
about entities acting as pooled plan providers to engage in effective
monitoring and oversight of this new type of ERISA retirement plan. As
discussed above, the potential for inadequate employer oversight of the
activities of a pooled employer plan and its plan fiduciaries and other
service providers may be greater than is true of other plans sponsored
by employers because the participating employers in pooled employer
plans give more responsibility to the pooled plan provider than they
typically give service providers in other plan arrangements. The final
regulation's information collection, which the Department has limited
to minimize burden, will assist the Department in fulfilling its
oversight responsibilities. Disclosure of any websites containing
marketing information for any pooled employer plan(s) established by
the provider, the date operations are expected to commence, and changes
relevant to the pooled plan provider's fiduciary duties (including, for
example, bankruptcy, litigation, and ongoing criminal or regulatory
enforcement actions involving fraud or dishonesty) all serve to help
with monitoring and oversight.
As stated above, the SECURE Act amended ERISA to remove possible
barriers to the broader use of multiple employer plans. This objective
was accomplished primarily by allowing multiple unrelated employers to
participate in an open MEP called a pooled employer plan that does not
require commonality among participating employers or a genuine
organizational relationship unrelated to participation in the plan. By
allowing most of the administrative and fiduciary responsibilities of
sponsoring a retirement plan to be transferred to pooled plan
providers, pooled employer plans give employers the option of providing
a workplace retirement plan to their employees with reduced burdens and
costs as compared to sponsoring their own separate single employer
retirement plan. Consequently, more plan formation and broader
availability of workplace retirement plans should occur, especially
among small employers.
The Department is uncertain of the number of pooled employer plans
that could be created based on the final rule, the number of employers
that will participate in such plans, and the number of participants and
beneficiaries that will be covered by them. The Department is
confident, however, that pooled employer plans will be created to take
advantage of the new statutory structure.
It is possible that each pooled plan provider that registers will
offer at least one new pooled employer plan and larger pooled plan
providers will offer more than one new pooled employer plan. As is the
case with multiple employer plans generally, pooled employer plans are
likely to vary substantially in size, although small pooled employer
plans are less likely to offer the economies of scale that could exist
for large or very large pooled employer plans.
The effects on coverage are somewhat uncertain because of the
possibility of at
[[Page 72950]]
least some zero-sum gain. Some new pooled employer plans will attract
participating employers that currently do not offer retirement savings
opportunities to their employees. The result in this situation would be
a net coverage increase, and retirement security could be improved to
some extent for the employees of these participating employers.\28\ At
the same time, however, the Department expects that some existing
retirement plans, most likely those of small single employer plan
sponsors, could terminate or otherwise cease to operate in their
current form and merge into pooled employer plans. A dominant influence
in this direction would be the administrative cost savings and other
operational efficiencies that come with economies of scale. The
Department has repeatedly acknowledged the potential benefits that
could accrue to small employers and their employees if they join
together in multiple employer plans and similar cooperative
arrangements.\29\
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\28\ Workplace retirement plans often provide a more effective
way for employees to save for retirement than saving in their own
IRAs. Compared with saving on their own in IRAs, workplace
retirement plans offer employees (1) higher contribution limits; (2)
generally lower investment management fees as the size of plan
assets increases; (3) a well-established uniform regulatory
structure with important consumer protections, including fiduciary
obligations, recordkeeping and disclosure requirements, legal
accountability provisions, and spousal protections; (4) automatic
enrollment; and (5) stronger protections from creditors. At the same
time, workplace retirement plans provide employers with choice among
plan features and the flexibility to tailor retirement plans that
meet their business and employment needs. See 84 FR 37528.
\29\ 84 FR 37508 (July 31, 2019) (Definition of ``Employer''
Under Section 3(5) of ERISA--Association Retirement Plans and Other
Multiple-Employer Plans); see also 83 FR28912 (June 21, 2018)
(Definition of ``Employer'' Under Section 3(5) of ERISA--Association
Health Plans).
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For different reasons, though, it also is possible that some
existing multiple employer plans would convert to pooled employer
plans.\30\ According to the most recent Form 5500 data, there are 4,523
defined contribution multiple employer plans.\31\ Conversions of this
type might occur, for example, if a multiple employer plan were to
conclude that restrictions under section 3(5) of ERISA, such as the
geographic limitations imposed pursuant to 29 CFR 2510.3-55(b)(2), the
substantial employment function test for bona fide professional
employer organization arrangements in 2510.3-55(c)(1), or the tests
articulated in the Department's subregulatory guidance for an entity to
be considered a bona fide group or association of employers were
disadvantageous or inefficient relative to the conditions for being a
pooled employer plan.
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\30\ Section 101 of SECURE Act itself contemplates such
conversions and provides a special rule for existing plans to elect
pooled employer plan status (new section 3(43)(C)) of ERISA).
\31\ Private Pension Plan Bulletin: Abstract of 2018 Form 5500
Annual Reports, Employee Benefits Security Administration
(forthcoming 2020).
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The total number of defined contribution plans, therefore, could
decrease as a result of these mergers and conversions. Even so,
however, net coverage (i.e., the number of total defined contribution
plan participants) could increase, because (1) participants in plans
that merge or convert into pooled employer plans would continue to be
covered under a retirement plan, and (2) some employers that do not
currently provide their employees with retirement plan access would
join pooled employer plans and their employees would count as newly-
covered participants.
Pooled employer plans generally would benefit from scale advantages
that small businesses do not currently enjoy, and the Department
expects that such plans will pass some of the attendant savings onto
participating employers and participants. Large scale may create two
distinct economic advantages for pooled employer plans. First, as scale
increases, marginal costs for pooled employer plans would diminish and
pooled plan providers would spread fixed costs over a larger pool of
member employers and employee participants, creating direct economic
efficiencies. Second, asset managers commonly offer proportionately
lower prices, relative to money invested, to larger investors, under
so-called tiered pricing practices resulting in decreased expense
ratios based on the aggregate amount of money invested by a single
pooled employer plan.
For example, larger plans tend to have lower fees overall.\32\
Generally, small plans with 10 participants pay approximately 50 basis
points more than plans with 1,000 participants.\33\ Small plans with 10
participants pay about 90 basis points more than large plans with
50,000 participants. Grouping small employers together into a pooled
employer plan could facilitate savings through administrative
efficiencies and sometimes through price negotiation (market power).
The degree of potential savings may be different for different types of
administrative functions, e.g., scale efficiencies can be very large
with respect to asset management, and may be smaller, but still
meaningful, with respect to functions such as marketing, distribution,
asset management, recordkeeping, and transaction processing.
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\32\ 84 FR 37508, 37535.
\33\ Deloitte Consulting and Investment Company Institute,
Inside the Structure of Defined Contribution/401(k) Plan Fees, 2013:
A Study Assessing the Mechanics of the ``All-in'' Fee (Aug. 2014).
Deloitte Consulting LLP conducted a survey of 361 defined
contribution plans for the Investment Company Institute. The study
calculates an ``all in'' fee that is comparable across plans
including both administrative and investment fees paid by the plan
and the participant. Deloitte predicted these estimates by analyzing
the survey results using a regression approach calculating basis
points as a share of assets. See 84 FR 37508, 37535.
---------------------------------------------------------------------------
Other potential benefits of the expansion of MEPs through the
creation of pooled employer plans could include (1) increased economic
efficiency as small businesses can more easily compete with larger
companies in recruiting and retaining workers due to a competitive
employee benefit package; (2) enhanced portability for employees that
leave employment with an employer to work for another employer
participating in the same pooled employer plan; (3) higher quality data
(more accurate and complete) reported to the Department on the Forms PR
and 5500; and (4) increased operating efficiency for small businesses
by shifting the administrative burden associated with establishing and
maintaining a retirement plan to a pooled plan provider.
1.5. Costs
The costs most directly associated with this rule are those
incurred to prepare and submit the registration statement. The PRA
section, below, discusses these costs in detail. As required under E.O.
13771, the estimated cost is $688,000 in the first year and $72,400 in
subsequent years.\34\ The perpetual time horizon annualized cost is
$106,100 in 2016 dollars, using a seven percent discount percent rate,
discounted from 2016. Other indirect costs may also be attributed to
the regulation, depending on the extent of pooled employer plan
formation, as well as the extent of conversions, mergers, and
contractions among existing plans. The likely extent of these actions
and associated costs is highly uncertain. With respect to any new
pooled employer plan, these indirect costs would relate to a pooled
plan provider complying with the requirements of the SECURE Act that
are not codified by this final regulation.
---------------------------------------------------------------------------
\34\ The total ten-year cost is $1,215,000 with a three percent
discount rate and $1,084,000 with a seven percent discount rate. The
annualized ten-year cost is $142,000 using a three percent discount
rate, and $154,000 using a seven percent discount rate.
---------------------------------------------------------------------------
[[Page 72951]]
Some commenters suggested that the final rule's reporting
requirements would be burdensome and duplicative of other ERISA-
required reporting requirements. One commenter asserted that the pooled
plan provider should not be required to report any information other
than the pooled plan provider's basic contact and identifying
information. While the Department acknowledges these concerns, the Form
5500 data generally is not available for 18 months after a plan starts
operation. Therefore, the Form PR will provide the Department with more
immediate access to pooled plan provider information. This will allow
the Department to monitor pooled plan providers and assess the need for
further guidance, which will help protect the interests of plan
participants and beneficiaries. In addition, changes to the proposed
rule have been made to address overbreadth and redundancy concerns.
Another commenter suggested that disclosing the pooled plan
provider's compliance officer would be burdensome, positing that the
Department was effectively requiring pooled plan providers to create a
compliance officer role. The Department has now clarified that this is
not the case. The final rule simply requires an identification of, and
basic contact information for, the person, unit, or element designated
by the pooled plan provider as the point-person responsible for
fielding and addressing questions about the pooled plan provider's
status under ERISA and the Code. Put differently, this provision
requires nothing more than for the company to identify whom it wishes
to receive and address status and compliance-oriented questions. The
Department has tailored this provision as narrowly as possible to
advance its intended objective without requiring any changes in
business practices. Thus, the Department does not expect that pooled
plan providers will incur costs to hire additional employees to serve
as responsible compliance officials.
1.6. Transfers
Several potential transfers could occur because of this final rule.
To the extent the formation of pooled employer plans leads employers
that previously sponsored retirement plans to terminate or freeze these
plans and join a pooled employer plan, there may be a transfer if the
pooled employer plan has different service providers and asset types
than the terminated plan. A similar transfer might occur in cases where
employers who previously did not offer their employees a retirement
plan join a pooled employer plan. Employees of these employers may have
been saving for retirement previously in different ways, such as
through an IRA, which would have different service providers. Service
providers that specialize in providing services to pooled employer
plans or are affiliated with a pooled plan provider might benefit at
the expense of other providers who specialize in providing services to
small plans or IRAs. Those different service providers would experience
gains or losses of income or market share.
The rule could also result in asset transfers if pooled plan
providers invest in different types of assets than plans that merge or
convert to pooled employer plans. For example, small plans tend to rely
more on mutual funds, while larger plans have greater access to other
types of investment vehicles such as bank common collective trusts and
insurance company pooled separate accounts, which allow for
specialization and plan specific fees. This movement of assets could
see profits move from mutual funds to other types of investment
managers.
Finally, the Code generally gives tax advantages to certain
retirement savings over most other forms of savings.\35\ Consequently,
all else being equal, workers who are saving money in tax qualified
retirement savings vehicles generally can enjoy higher lifetime
consumption and wealth than those who do not. The magnitude of the
relative advantage generally depends on the worker's tax bracket, the
amount contributed to the plan, the timing of contributions and
withdrawals, and the investment performance of the assets in the
account. Workers that do not contribute to a qualified retirement
savings vehicle because they lack access to a workplace retirement plan
do not reap this relative advantage. This rule would likely increase
the number of American workers with access to tax-qualified workplace
retirement plans, which would spread this financial advantage to some
people who are not currently receiving it. If access to retirement
plans and savings increase because of this rule, a transfer will occur
flowing from all taxpayers to those individuals receiving tax
preferences as a result of new and increased retirement savings.
---------------------------------------------------------------------------
\35\ Employer contributions to qualified pension plans and,
generally, employee contributions made at the election of the
employee through salary reduction are not taxed until distributed to
the employee, and income earned on those amounts is not taxed until
distributed. The tax expenditure for ``net exclusion of pension
contributions and earnings'' is computed as the income taxes forgone
on current tax-excluded pension contributions and earnings less the
income taxes paid on current pension distributions.
---------------------------------------------------------------------------
As is evident from the foregoing, the exact magnitude of the
potential transfers is uncertain at this stage, as are the precise
identities of the transferors and transferees. Much depends on the
number of pooled employer plans that eventually come into existence,
the extent of plan consolidation, the number of employers that begin
participating anew in pooled employer plans, and the savings habits of
the employees of these employers (who might have heretofore been saving
through an IRA). Major influences on each of these factors include,
among other things, the nature, extent, and timing of the regulatory
intervention needed to implement the SECURE Act, as well as the general
state of the economy.
1.7. Uncertainty
While the Department has identified types of service providers that
it believes will be well positioned to act as pooled plan providers, it
is unclear how many will choose to enter the market and whether they
will do so in the first year of enactment or in later years. The
Department solicited comments on which and how many entities are likely
to register as pooled plan providers. However, the Department did not
receive comments that specifically addressed this question. Thus, the
Department has based its assumptions on discussions with stakeholders
and articles on emerging markets.
1.8. Regulatory Alternatives
Section 101 of the SECURE Act requires pooled plan providers to
register with the Secretary and provide such other information as the
Secretary may require, before beginning operations as a pooled plan
provider. The Department considered several alternative forms of
information to be included that are discussed below.
The Department could have required fewer data elements, such as
contact information only, including address and email. While slightly
less burdensome than the final rule's requirements, requiring fewer
data elements would provide substantially less information to the
Department, which would impede its ability to fulfill its critical
oversight role of protecting participants and plan assets. Employers
also would receive less information to survey the market when choosing
a pooled plan provider or deciding whether to continue to rely on an
existing provider.
The Department considered requiring pooled plan providers to file a
[[Page 72952]]
registration for each pooled employer plan. This would have required
pooled plan providers to file multiple similar filings. The Department
did not choose this option, because it would have required pooled
service providers to make multiple filings while providing minimal
additional benefits.
The Department also considered not requiring pooled service
providers to make supplemental filings. While this option would have
been less burdensome than the chosen option, it would have provided
less information to the Department and interested employers. Requiring
pooled service providers to report updated information to the
Department can provide key information the Department needs to fulfill
its oversight role. Therefore, the Department determined that the
benefits of requiring supplemental filings justify any additional cost
that pooled plan providers would incur to furnish the updated
information.
2. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44
U.S.C. 3506(c)(2)(A)), the Department solicited comments concerning the
information collection request (ICR) included in the Registration
Requirements to Serve as a Pooled Plan Provider to Pooled Employer
Plans ICR (85 FR 54288). At the same time, the Department also
submitted an information collection request (ICR) to the Office of
Management and Budget (OMB), in accordance with 44 U.S.C. 3507(d).
The Department did not receive comments that specifically addressed
the paperwork burden analysis of the information collection requirement
contained in the proposed rule.
In connection with publication of this final rule, the Department
submitted an ICR to OMB requesting approval of a new collection of
information under OMB Control Number 1210-0164, which expires on
November 30, 2023. OMB approved the ICR on November 16, 2020.
A copy of the ICR may be obtained by contacting the PRA addressee
shown below or at www.RegInfo.gov. PRA ADDRESSEE: G. Christopher Cosby,
Office of Regulations and Interpretations, U.S. Department of Labor,
Employee Benefits Security Administration, 200 Constitution Avenue NW,
Room N-5718, Washington, DC 20210; [email protected]. Telephone: 202-
693-8410; Fax: 202-219-4745. These are not toll-free numbers.
The SECURE Act requires a person to register as a pooled plan
provider with the Secretary, and provide other information the
Secretary may require, before beginning operations. This information
collection contains the requirements to register with the Secretary
under section 3(44) of the Act. The information collection will use the
same EFAST 2 electronic filing system that pooled plan providers will
use to file the Form 5500 required to be filed on behalf of the pooled
employer plan the provider operates.
The Department has designed a two-part approach for this
requirement. The first consists of a simple registration of mainly
contact information and links to marketing websites. Pooled plan
providers must electronically register with the Department at least 30
days before beginning operations. Pooled plan providers that will
initiate operations of a plan as a pooled employer plan on or after
January 1, 2021, can register anytime before February 1, 2021, provided
that the registration is filed ``on or before'' the initiation of
operations of a plan as a pooled employer plan. The 30-day waiting
period between registration and the start of plan operations for these
pooled plan providers will be waived. The information included in the
registration should be collected by the pooled plan provider during its
normal course of business, so collection should not require additional
effort by the administrator. The Department estimates that compiling
and submitting the initial registration information will take about 45
minutes and impose no additional costs on the administrator. To limit
costs, a pooled plan provider needs to file only one registration
regardless of the number of pooled employer plans it operates, provided
that a supplemental statement is filed identifying each pooled employer
plan before the initiation of operations of the plan as a pooled
employer plan. Assuming roughly 3,200 pooled plan providers, the
Department estimates a burden of 2,425 hours, with an equivalent cost
of $402,000, in the first year.\36\
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\36\ 3,223 pooled plan providers * 0.75 hours = 2,425 hours.
2,425 hours * $165.63 = $401,653. Labor rates are EBSA estimates,
found at https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
---------------------------------------------------------------------------
If the pooled plan provider does not begin operating any new pooled
employer plans, does not change its contact information, or does not
experience any changes as described in the final rule, it may go for a
period of months or years without needing to supplement its
registration. The Department anticipates that this will often be the
case.
Pooled plan providers are required to file a supplemental filing
within the later of 30 days after the calendar quarter in which a
reportable event occurred or 45 days after a reportable event. The
supplemental filing requirement is similar to, although more limited
than, filers' obligations with respect to the Form M-1, which requires
entities to submit additional filings to document changes.
Approximately seven percent of entities filing a Form M-1 in 2017
submitted an additional filing after undergoing a change. Assuming
pooled plan providers will behave in a similar manner, the Department
estimates that approximately 230 pooled plan providers will submit
supplemental filings documenting changes annually, including in the
first year.
The supplemental filing amends the original registration to include
information either for pooled employer plans that begin operations or
cease operations, or for material changes relevant to the pooled plan
provider's fiduciary duties (including, for example, bankruptcy,
litigation, and criminal or regulatory enforcement actions involving
fraud or dishonesty). Accordingly, the Department estimates the
supplemental filing will take 30 minutes for pooled plan providers to
submit. The Department does not believe, however, that the pooled plan
provider will incur any additional costs beyond the labor costs
necessary to collect and submit this information. The Department
estimates that there will be 3,460 filings under the second part of
this requirement in the first year, imposing a burden of 1,730 hours,
with an equivalent cost of $287,000.\37\
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\37\ 3,460 pooled plan providers * 0.50 hour = 1,730 hours.
1,730 hours * $165.63 = $286,540. Labor rates are EBSA estimates,
found at https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
---------------------------------------------------------------------------
In subsequent years, the Department believes that the percentage of
pooled plan providers reporting beginning or ceasing operations of
pooled employer plans will roughly parallel the experience of Form M-1
filers. Approximately 14 percent of Form M-1 filers indicated they
began operations in 2017, while six percent indicated they ceased
operations.\38\ Assuming pooled plan providers behave in a similar
manner, the Department expects an additional 650 registrations related
to
[[Page 72953]]
beginning or ceasing operations annually in subsequent years.\39\ These
filings have an associated hour burden of 324 hours with an equivalent
cost of nearly $54,000 in subsequent years.
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\38\ Pension plans face additional burdens in terminating, and
so using welfare plans termination rates as a proxy may overstate
the number of incidents.
\39\ 3,233 * 0.14 = 453 pooled plan providers report pooled
employer plans beginning operation, 453 pooled plan providers * 0.50
hour = 227 hours. 227 hours * $165.63 = $37,598 3,233 * 0.06 = 453
pooled plan providers report pooled employer plans ending operation,
194 pooled plan providers * 0.50 hour = 977 hours. 97 hours *
$165.63 = $16,060.
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The estimated total burden of this information collection is 4,155
hours, with an equivalent cost of $688,000, in the first year and 437
hours, with an equivalent cost of $72,400, in subsequent years.\40\
---------------------------------------------------------------------------
\40\ 873 filings * 0.5 hours = 437 hours. The 873 filings in
subsequent years are 453 pooled plan providers reporting pooled
employer plans beginning operations, 194 pooled plan providers
reporting pooled employer plans ending operations, and 226 pooled
plan providers filing other changes.
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The Department expects many pooled plan providers will file the
first part of registrations in the initial year, and significantly
fewer will file in subsequent years as the market stabilizes. Incidents
of filing updated and amended registration statements are expected to
increase after the first year, as pooled employer plans enter and exit
the market, change service providers, and change pooled employer plan
offerings.
A summary of paperwork burden estimates follows:
Type of Review: New collection.
Agency: Employee Benefits Security Administration, U.S. Department
of Labor.
Title: Registration Requirements To Serve as a Pooled Plan Provider
To Pooled Employer Plans.
OMB Control Number: 1210-0164.
Affected Public: Businesses or other for-profits.
Estimated Number of Respondents: 1,660 3-year average (3,233 first
year, 873 subsequent years).
Estimated Number of Annual Responses: 2,813 3-year average (6,693
first year, 873 subsequent years).
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 1,676 3-year average (4,155
first year, 437 subsequent years).
Estimated Total Annual Burden Cost: 0.
3. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \41\ imposes certain
requirements with respect to Federal rules that are (1) subject to the
notice and comment requirements of section 553(b) of the Administrative
Procedure Act \42\ and (2) likely to have a significant economic impact
on a substantial number of small entities. Unless an agency determines
that a final rule is not likely to have a significant economic impact
on a substantial number of small entities, section 604 of the RFA
requires the agency to present a final regulatory flexibility analysis
of the final rule. The Department has determined that this final rule,
which would require prospective pooled plan providers to register with
the Department prior to beginning operations, is not likely to have a
significant economic impact on a substantial number of small entities.
Therefore, the Department certifies that the final rule will not have a
significant economic impact on a substantial number of small entities.
The Department estimates that only about eight percent of the potential
market will be subject to the rule as pooled plan providers. Each of
these entities would incur an estimated cost of $124 to register and
$83 to update the registration if needed. Below is justification for
this determination.
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\41\ 5 U.S.C. 601 et seq. (1980).
\42\ 5 U.S.C. 551 et seq. (1946).
---------------------------------------------------------------------------
3.1. Need for and Objectives of the Rule
Section 101 of the SECURE Act requires pooled plan providers to
register with the Department, the Treasury Department, and the IRS. As
noted above, the Treasury Department and the IRS have indicated that
filing the registration statement with the Department will also satisfy
the Code's registration requirement. The information required to be
reported under the final rule would allow regulators to identify and
monitor pooled plan providers. While some of the required information
may be found in the Form 5500, which pooled plan providers will also be
required to file on behalf of each participating employer plan they
operate, this reporting is not available for more than 18 months after
the pooled plan providers begin operating. The Form 5500, however,
would not necessarily include some important information regarding the
pooled plan providers themselves, such as bankruptcy filings, or the
commencement of any criminal, civil, or administrative proceedings
involving a claim of fraud or dishonesty with respect to any employee
benefit plan or involving the mismanagement of plan assets. Requiring
pooled plan providers to register gives both the agencies and the
public, including participating employers, more immediate access to the
information for monitoring purposes, and enables the agencies to
monitor how this new market develops and assess whether further
guidance is needed.
3.2. Affected Small Entities
The Department has identified certain existing entities that it
believes would be most likely to serve as pooled plan providers. For
example, recordkeepers that currently administer retirement plans are
well positioned to serve as pooled plan providers. Similarly, many PEOs
have served as plan administrators and would likely have little trouble
taking on the role of pooled plan provider. Further, many insurers have
expressed interest in serving as pooled plan providers. While
retirement plan advisors such as broker-dealers and registered
investment advisors are also plausible candidates, the Department
believes that many would be reluctant to assume the named fiduciary and
plan administrator roles. Entities such as registered investment
advisors may likely be more comfortable serving as section 3(38)
investment managers for the pooled plan providers.
Based on such considerations, the Department estimates that roughly
3,200 unique entities will initially register to serve as pooled plan
providers. Recordkeepers and plan administrators of existing defined
contribution pension plans are most likely to enter the market,
followed by PEOs, chambers of commerce, and plan advisors.
While the Department does not have complete information on which of
these entities meet the Small Business Administration's definition of a
small entity, many of these entities likely are small. The Department
estimates that about half of current recordkeepers and plan
administrators currently serving defined contribution plans would
register to become pooled plan providers. Other types of providers will
likely comprise a smaller share of entities that register. Overall, the
Department estimates that about eight percent of the universe of
entities the Department has identified as well-suited to serve as
pooled plan providers are likely to register. The table below includes
both large and small entities. The Department cannot estimate with
specificity the distribution by size of the providers that will choose
to become pooled plan providers. However, most of the providers in
these service categories meet the Small Business Administration
definition of small entities. If the percentages in the footnote are
applied to the number of affected entities in the table below, about
2,600 businesses could be small businesses.\43\
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\43\ Some possible affected industries by NAICS code are as
follows: 524292 third-party administration, more than 90 percent
small business; 524113 underwriting annuities and life insurance,
more than 70 percent small business; 523999 financial investment
services, more than 95 percent small businesses; 523999 brokerage,
financial investment services, more than 95 percent small business;
561330 professional employer organization, more than 90 percent
small business.
[[Page 72954]]
Estimated Pooled Plan Provider
----------------------------------------------------------------------------------------------------------------
Expected Estimated
Universe share (%) number
----------------------------------------------------------------------------------------------------------------
Unique Recordkeepers and Plan Administrators for existing DC 2,378 50 1189
Plans \a\......................................................
Professional Employer Organizations \b\......................... 907 25 227
Chambers of Commerce \c\........................................ 4,000 5 200
Large Broker-Dealers \d\........................................ 173 5 9
Registered Investment Advisor Firms \d\......................... 30,246 5 1512
Direct Annuity Writers (Insurance Companies) \e\................ 386 25 97
-----------------------------------------------
Total....................................................... 38,090 8 3,233
----------------------------------------------------------------------------------------------------------------
\a\ 2017 Form 5500 Schedule C Data.
\b\ National Association of Professional Employers, https://www.napeo.org/what-is-a-peo/about-the-peo-industry/industry-statistics.
\c\ Association of Chamber of Commerce Executives reports that there are 4,000 Chambers with at least 1 full-
time staff person.
\d\ FINRA Industry Snapshot. FINRA reported 3,607 FINRA registered firms in 2018. There were 173 with 500 or
more registered representatives.
\e\ National Association of Insurance Commissioners.
One commenter was concerned that the rule would expose pooled
employer plans to litigation risk. The commenter suggested that this
would dissuade pooled plan provider from registering and thus, there
would be fewer pooled employer plans available to small employers.
While the Department acknowledges this concern, the Department believes
that the rule will result in a greater availability of workplace
retirement plans among small employers. By allowing most of the
administrative and fiduciary responsibilities of sponsoring a
retirement plan to be transferred to pooled plan providers, pooled
employer plans provide small employers with the option of providing a
workplace retirement plan to their employees with reduced burdens and
costs as compared to sponsoring their own separate single employer
retirement plan.
3.3. Impact of the Rule
The Department estimates that it would take the average pooled plan
provider with a labor rate of $165.63 only 45 minutes to register, at
an expense of $124.23, because the information necessary is readily
available through the normal course of business.\44\ Pooled plan
providers submit the filing only when data elements change, the
administrator begins or ceases operations for any pooled employer plan,
or the pooled plan provider undergoes a change. The supplemental filing
will require an estimated 30 minutes to complete, at an expense of
$82.82. As with the initial registration, the required information for
the supplemental filing is readily available. The cost to file both a
registration and a supplemental filing in a single year would be
$207.16, which would be less than one percent of revenue if a business
had more than $20,700 in revenue. The Department lacks complete data to
determine the number of firms that do not meet this revenue threshold.
Available data suggests that 15 percent of possibly affected firms have
less than $100,000 in revenue.\45\
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\44\ To register: 0.75 hours per pooled plan provider; 0.75
hours * $165.63 = $124.23. To update a registration: 0.50 hours *
$165.63 = $82.82. The total labor rate for a financial manager is
used as a proxy for the labor rate. Labor rates are EBSA estimates
found at www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-june-2019.pdf.
\45\ Data set supplied by the Small Business Administration
containing data on the number of firms and revenue by NAICS codes.
Estimates used NAICS codes 524292, 56133, 523120, 52393, 523130, and
524113.
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To further illustrate how small a $207 burden is, note that a one-
person firm consisting of an individual with a labor rate of $165.63
would need to work only 125 hours to have revenue of $20,700. That same
individual working 2,000 hours, a standard work year, would produce
revenue of $331,260, resulting in $207.16 being significantly less than
one percent of revenue.
3.4. Duplicate, Overlapping, or Relevant Federal Rules
The final rule does not conflict with any relevant Federal rules.
Section 101 of the SECURE Act requires pooled plan providers to
register both with the Department and with the Treasury Department and
the IRS. The final Form PR satisfies requirements under both Title I of
ERISA and the Code. Moreover, the statute expressly authorizes the
Departments to require reporting of additional information.
4. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 requires each
Federal agency to prepare a written statement assessing the effects of
any Federal mandate in a proposed or final agency rule that may result
in an expenditure of $100 million or more (adjusted annually for
inflation with the base year 1995) in any one year by State, local, and
tribal governments, in the aggregate, or by the private sector.\46\ For
purposes of the Unfunded Mandates Reform Act, as well as Executive
Order 12875, this final rule does not include any Federal mandates that
the Department expects would result in such expenditures by State,
local, and tribal governments, or the private sector.\47\ This rule
simply requires entities that choose to become pooled plan providers to
register with the Department.
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\46\ 2 U.S.C. 1501 et seq. (1995).
\47\ Enhancing the Intergovernmental Partnership, 58 FR 58093
(Oct. 28, 1993).
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5. Federalism Statement
Executive Order 13132 outlines fundamental principles of
federalism, and requires that Federal agencies adhere to specific
criteria when formulating and implementing policies that have
``substantial direct effects'' on the states, the relationship between
the national government and states, or on the distribution of power and
responsibilities among the various levels of government.\48\ Federal
agencies promulgating regulations that have federalism implications
must first consult with State and local officials,
[[Page 72955]]
then describe in the preamble to the final rule the extent of their
consultation and the nature of the officials' concerns.
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\48\ Federalism, supra note 7.
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This final rule does not have federalism implications because it
will not have direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among various levels of government. This final
rule simply requires private companies that choose to offer pooled
employer plans to register with the Department.
List of Subjects in 29 CFR Part 2510
Employee benefit plans, Pensions.
For the reasons stated in the preamble, the Department of Labor
amends 29 CFR part 2510 as follows:
PART 2510--DEFINITIONS OF TERMS USED IN SUBCHAPTERS C, D, E, F, G,
AND L OF THIS CHAPTER
0
1. The authority citation for part 2510 is revised to read as follows:
Authority: 29 U.S.C. 1002(1), 1002(2), 1002(3), 1002(5),
1002(16), 1002(21), 1002(37), 1002(38), 1002(40), 1002(42),
1002(43), 1002(44), 1031, and 1135; Secretary of Labor's Order No.
1-2011, 77 FR 1088 (Jan. 9, 2012); Sec. 2510.3-101 and 2510.3-102
also issued under sec. 102 of Reorganization Plan No. 4 of 1978, 5
App. (E.O. 12108, 44 FR 1065 (Jan. 3, 1979)) and 29 U.S.C. 1135
note. Sec. 2510.3-38 is also issued under sec. 1, Pub. L. 105-72,
111 Stat. 1457 (1997).
0
2. Add Sec. 2510.3-44 to read as follows:
Sec. 2510.3-44 Registration Requirement to Serve as a Pooled Plan
Provider to Pooled Employer Plans
(a) General. Section 3(44) of the Act sets forth the criteria that
a person must meet to be a pooled plan provider for pooled employer
plans under section 3(43) of the Act.
(b) Registration requirement. Subparagraph (A)(ii) of section 3(44)
requires the person to register as a pooled plan provider with the
Department and provide such other information as the Department may
require, before beginning operations as a pooled plan provider. For
this purpose, ``beginning operations as a pooled plan provider'' means
the initiation of operations of the first plan that the person operates
as a pooled employer plan, as described in paragraph (b)(6) of this
section. To meet the requirements to register with the Department under
section 3(44) of the Act, a person intending to act as a pooled plan
provider must:
(1) At least 30 days before beginning operations as a pooled plan
provider, file with the Department the following information on a
complete and accurate Form PR (Pooled Plan Provider Registration) in
accordance with the form's instructions.
(i) The legal business name and any trade name (doing business as)
of such person.
(ii) The business mailing address and phone number of such person.
(iii) The employer identification number (EIN) assigned to such
person by the Internal Revenue Service.
(iv) The address of any public website or websites of the pooled
plan provider or any affiliates to be used to market any such person as
a pooled plan provider to the public or to provide public information
on the pooled employer plans operated by the pooled plan provider.
(v) Name, address, contact telephone number, and email address for
the responsible compliance official of the pooled plan provider. For
purposes of this paragraph (b)(1)(v), the term ``responsible compliance
official'' means the person or persons, identified by name, title, or
office, responsible for addressing questions regarding the pooled plan
provider's status under, or compliance with, applicable provisions of
the Act and the Internal Revenue Code as pertaining to a pooled
employer plan.
(vi) The agent for service of legal process for the pooled plan
provider, and the address at which process may be served on such agent.
(vii) The approximate date when pooled plan operations are expected
to commence.
(viii) An identification of the administrative, investment, and
fiduciary services that will be offered or provided in connection with
the pooled employer plans by the pooled plan provider or an affiliate.
For purposes of this paragraph (b)(1)(viii), the term ``affiliate''
includes all persons who are treated as a single employer with the
person intending to be a pooled plan provider under section 414(b),
(c), (m), or (o) of the Internal Revenue Code who will provide services
to pooled employer plans sponsored by the pooled plan provider and any
officer, director, partner, employee, or relative (as defined in
section 3(15) of the Act) of such person; and any corporation or
partnership of which such person is an officer, director, or partner.
(ix) A statement disclosing any ongoing Federal or State criminal
proceedings, or any Federal or State criminal conviction, related to
the provision of services to, operation of, or investments of, any
employee benefit plan, against the pooled plan provider, or any
officer, director, or employee of the pooled plan provider, provided
that any criminal conviction may be omitted if the conviction, or
related term of imprisonment served, is outside ten years of the date
of registration.
(x) A statement disclosing any ongoing civil or administrative
proceedings in any court or administrative tribunal by the Federal or
State government or other regulatory authority against the pooled plan
provider, or any officer, director, or employee of the pooled plan
provider, involving a claim of fraud or dishonesty with respect to any
employee benefit plan, or involving the mismanagement of plan assets.
(2) No later than the initiation of operations of a plan as a
pooled employer plan, as described in paragraph (b)(6) of this section,
file with the Department a supplemental report using the Form PR
containing the name and plan number that the pooled employer plan will
use for annual reporting purposes, and the name, address, and EIN for
the trustee for the plan.
(3) File with the Department a supplemental report using the Form
PR within the later of 30 days after the calendar quarter in which the
following reportable events occurred or 45 days after a following
reportable event occurred:
(i) Any change in the information reported pursuant to paragraph
(b)(1) or (2) of this section unless otherwise disclosed pursuant to
paragraphs (b)(3)(iii) through (v) of this section.
(ii) Any significant change in corporate or business structure of
the pooled plan provider, e.g., merger, acquisition, or initiation of
bankruptcy, receivership, or other insolvency proceeding for the pooled
plan provider or an affiliate that provides services to a pooled
employer plan, or ceasing all operations as a pooled plan provider.
(iii) Receipt of written notice of the initiation of any
administrative proceeding or civil enforcement action in any court or
administrative tribunal by any Federal or State governmental agency or
other regulatory authority against the pooled plan provider, or any
officer, director, or employee of the pooled plan provider involving a
claim of fraud or dishonesty with respect to any employee benefit plan,
or involving the mismanagement of plan assets.
(iv) Receipt of written notice of a finding involving a claim of
fraud or dishonesty with respect to any employee benefit plan, or
involving the mismanagement of plan assets in any matter described in
paragraph (b)(1)(x) or (b)(3)(iii) of this section.
(v) Receipt of written notice of the filing of any Federal or State
criminal
[[Page 72956]]
charges related to the provision of services to, operation of, or
investments of any pooled employer plan or other employee benefit plan
against the pooled plan provider or any officer, director, or employee
of the pooled plan provider.
(4) Only one registration must be filed for each person intending
to act as a pooled plan provider, regardless of the number of pooled
employer plans it operates. A pooled plan provider must file updates
for each pooled employer plan described in paragraph (b)(2) of this
section, any change of previously reported information, and any change
in circumstances listed in paragraph (b)(3) of this section, but may
file a single statement to report multiple changes, as long as the
timing requirements are met with respect to each reportable change.
(5) If a pooled plan provider has terminated and ceased operating
all pooled employer plans, the pooled plan provider must file a final
supplemental filing in accordance with instructions for the Form PR.
For purposes of this section, a pooled employer plan is treated as
having terminated and ceased operating when a resolution has been
adopted terminating the plan, all assets under the plan (including
insurance/annuity contracts) have been distributed to the participants
and beneficiaries or legally transferred to the control of another
plan, and a final Form 5500 has been filed for the plan.
(6) For purposes of this section, a person is treated as initiating
operations of a plan as a pooled employer plan when the first employer
executes or adopts a participation, subscription, or similar agreement
for the plan specifying that it is a pooled employer plan, or, if
earlier, when the trustee of the plan first holds any asset in trust.
(7) Registrations required under this section shall be filed with
the Secretary electronically on the Form PR in accordance with the Form
PR instructions published by the Department.
(8) For purposes of this section, the term ``administrative
proceeding'' or ``administrative proceedings'' means a judicial-type
proceeding of public record before an administrative law judge or
similar decision-maker.
(9) For purposes of this section, the term ``other regulatory
authority'' means Federal or State authorities and self-regulatory
organizations authorized by law, but does not include any foreign
regulatory authorities.
(10) For purposes of paragraphs (b)(1)(ix) and (x) and (b)(3)(iii)
and (v) of this section, employees of the pooled plan provider include
employees of the pooled employer plan, but only if they handle assets
of the plan, within the meaning of section 412 of the Act, or if they
are responsible for operations or investments of the pooled employer
plan.
(c) Transition rule. Notwithstanding paragraph (b)(1) of this
section, a person intending to act as a pooled plan provider may file
the Form PR on or before beginning operations as a pooled plan provider
(dispensing with the 30-day advance filing requirement) if the filing
is made before February1, 2021.
(d) Acquittals and removal of information. A pooled plan provider
may file an update to remove any matter previously reported under
paragraph (b)(1)(ix) or (b)(3)(v) of this section for which the
defendant has received an acquittal. For this purpose, the term
``acquittal'' means a finding by a judge or jury that a defendant is
not guilty or any other dismissal or judgment which the government may
not appeal.
Signed at Washington, DC.
Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 2020-25170 Filed 11-13-20; 8:45 am]
BILLING CODE 4510-29-P